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 Federal  Communications  Commission  FCC  04-  162 
 1 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 


 In  the  Matter  of 
 Policies  and  Rules  Governing  Interstate  Pay-  Per-Call  and  Other  Information  Services  Pursuant  to 
 the  Telecommunications  Act  of  1996 
 Policies  and  Rules  Governing  Interstate  Pay-  Per-Call  and  Other  Information  Services,  and  Toll-  free 
 Number  Usage 
 Truth-  in-  Billing  and  Billing  Format 
 Policies  and  Rules  Implementing  the  Telephone  Disclosure  and  Dispute  Resolution  Act,  Florida 
 Public  Service  Commission  Petition  to  Initiate  Rulemaking  to  Adopt  Additional  Safeguards 


 Application  for  Review  of  Advisory  Ruling  Regarding  Directly  Dialed  Calls  to  International 
 Information  Services 


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 CC  Docket  No.  96-  146 
 CG  Docket  No.  04-  244 
 CC  Docket  No.  98-  170 
 RM-  8783 


 ENF-  95-  20 
 NOTICE  OF  PROPOSED  RULEMAKING  AND  MEMORANDUM  OPINION  AND  ORDER 
 Adopted:  July  1,  2004  Released:  July  16,  2004 
 Comment  Date:  30  days  after  publication  in  the  Federal  Register.  Reply  Comment  Date:  45  days  after  publication  in  the  Federal  Register. 


 By  the  Commission: 
 Table  of  Contents  Paragraph 
 I.  INTRODUCTION  ...................................................................................................................  1 
 II.  BACKGROUND  .....................................................................................................................  4  A.  Telephone  Disclosure  and  Dispute  Resolution  Act  (TDDRA)...................................  4 
 B.  Telecommunications  Act  of  1996...............................................................................  6  C.  FCC  Rules  and  Rulemakings......................................................................................  7 


 III.  NOTICE  OF  PROPOSED  RULEMAKING............................................................................  8  A.  Background.................................................................................................................  8 
 B.  Discussion...................................................................................................................  10  1.  Toll-  free  numbers.................................................................................................  10 
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 2.  Audiotext  Information  Services,  Including  Pay-  Per-  Call  Services  ......................  15  3.  Billing...................................................................................................................  25 
 4.  Revenue-  sharing  Arrangements  ...........................................................................  28  5.  New  and  Evolving  Services  .................................................................................  32 


 IV.  MEMORANDUM  OPINION  AND  ORDER  IN  CC  DOCKET  NO.  96-  146  .........................  36  A.  WKP  Application  for  Review.....................................................................................  36 
 B.  Florida  Public  Service  Petition  for  Rulemaking  .........................................................  37  C.  Closing  CC  Docket  96-  146.........................................................................................  38 
 D.  Correction  of  Word  Error  ...........................................................................................  41 
 V.  PROCEDURAL  ISSUES.........................................................................................................  42  A.  Ex  Parte  Presentations  ................................................................................................  42 
 B.  Paperwork  Reduction  Act...........................................................................................  43  C.  Initial  Regulatory  Flexibility  Analysis........................................................................  44 
 D.  Filing  Instructions  .......................................................................................................  45  E.  Materials  in  Accessible  Formats.................................................................................  48 


 VI.  ORDERING  CLAUSES..........................................................................................................  49  Appendix  A:  Amended  Rule 
 Appendix  B:  Initial  Regulatory  Flexibility  Analysis  Appendix  C:  Commenters 


 I.  INTRODUCTION 
 1.  In  this  Notice  of  Proposed  Rulemaking  and  Memorandum  Opinion  and  Order  (NPRM),  we  initiate  a  new  proceeding  to  review  the  effectiveness  of  our  rules  governing  pay-  per-  call  services, 


 related  audiotext  information  services,  and  toll-  free  numbers.  1  Specifically,  we  seek  comment  on  the  state  of  the  900-  number  regime  regulating  pay-  per-  call  services.  We  also  seek  comment  on  the 
 effectiveness  of  consumer  protections  relating  to  toll-  free  numbers,  and  to  those  audiotext  information  services  accessed  through  dialing  methods  other  than  900  numbers.  We  are  interested  in  learning  whether 
 we  need  to  take  additional  steps  to  protect  consumers.  In  addition,  we  seek  comment  on  changes  in  technology  that  warrant  re-  examination  and  clarification  of  these  rules. 


 2.  We  also  close  CC  Docket  No.  96-  146,  a  rulemaking  initiated  in  1996  to  implement  portions  of  the  Telecommunications  Act  of  1996  (1996  Act)  governing  pay-  per-  call  and  related 
 information  services.  This  docket  was  opened  specifically  for  the  purpose  of  implementing  section  228  as  amended  by  the  1996  Act.  2  In  the  Order  and  Notice  of  Proposed  Rulemaking  (1996  Order  &  NPRM),  the 
 Commission  adopted  new  rules,  incorporating  much  of  the  statute  verbatim,  and  completed 


 1  Pay-  per-  call  services  and  other  information  services  offer  a  variety  of  recorded  and  interactive  information  and 
 entertainment  programs.  While  pay-  per-  call  services  are  currently  confined  to  900  numbers,  other  audiotext  information  services  may  be  provided  through  other  dialing  sequences.  See  infra  para.  8.  Thus,  pay-  per-  call 


 services  are  encompassed  by  the  larger  category  of  audiotext  information  services  discussed  in  more  detail  in  this  item. 
 2  Policies  and  Rules  Governing  Interstate  Pay-  Per-  Call  and  Other  Information  Services  Pursuant  to  the 
 Telecommunications  Act  of  1996,  CC  Docket  No.  96-  146;  Policies  and  Rules  Implementing  the  Telephone  Disclosure  and  Dispute  Resolution  Act,  CC  Docket  No.  93-  22,  Order  and  Notice  of  Proposed  Rule  Making,  11  FCC 


 Rcd  14738,  14739,  para.  2  (1996)  (1996  Order  &  NPRM). 
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 implementation  of  the  new  provisions  of  section  228.  In  addition,  the  Commission  sought  comment  on  several  measures  intended  to  curb  the  potential  for  evasions  of  the  amended  law.  3  In  the  years  since  the 
 rules  took  effect,  the  shape  of  the  pay-  per-  call  industry,  technology  in  general,  and  regulatory  perspectives  have  changed  considerably.  For  reasons  of  administrative  efficiency,  detailed  below,  we 
 now  close  that  docket.  Furthermore,  we  deny  a  related  application  for  review. 
 3.  We  believe  that  our  rules  covering  the  pay-  per-  call  services  through  900  numbers,  and  those  rules  covering  toll-  free  calls,  provide  important  consumer  protections.  However,  we  are  concerned 


 that  the  use  of  other  dialing  mechanisms,  and  abuse  of  exceptions  and  exemptions,  might  also  circumvent  the  consumer  protections  our  regulations  were  designed  to  address.  With  this  NPRM,  we  move  to  review 
 the  current  situation,  and  take  whatever  actions  are  necessary  to  foster  the  flow  of  audiotext  information  services  and  the  use  of  toll-  free  numbers,  while  ensuring  consumers  have  adequate  protections. 


 II.  BACKGROUND 
 A.  Telephone  Disclosure  and  Dispute  Resolution  Act  (TDDRA) 
 4.  The  Commission  first  adopted  regulations  governing  interstate  pay-  per-  call  services  in  1991  to  address  complaints  of  widespread  abuse  involving  900  number  services.  4  At  that  time,  the 


 Commission  required  pay-  per-  call  programs  to  have  preambles  disclosing  costs,  required  local  exchange  carriers  (LECs)  to  offer  consumers  the  option  of  blocking  900  numbers  where  technically  possible,  and 
 prohibited  common  carriers  from  disconnecting  basic  telephone  service  for  failure  to  pay  pay-  per-  call  charges.  5  A  year  later,  Congress  enacted  the  TDDRA  in  an  attempt  to  curtail  abuses  in  pay-  per-  call, 
 related  services  and  toll-  free  numbers.  6  The  TDDRA  charged  both  this  Commission  and  the  Federal  Trade  Commission  (FTC)  with  adopting  rules  to  expand  consumer  protections  and  promote  the 
 development  of  legitimate  pay-  per-  call  services.  7  In  response  to  burgeoning  consumer  complaints,  the 


 3  1996  Order  &  NPRM,  11  FCC  Rcd  at  14752,  para.  41  (  It  is  our  belief  that  in  analyzing  the  effect  of  the  new 
 statutory  requirements,  we  must  look  not  only  to  the  practices  that  are  now  prohibited  but  also  to  the  likely  responses  of  [information  service  providers]  and  common  carriers  who  might  seek  to  evade  the  statute.  Our 


 consideration  of  possible  evasions  is  influenced  by  awareness  of  past  evasions  that  have  resulted  in  widespread  deception  and  abuse.  We  believe  that  we  should  act  now  to  discourage  future  abuse.). 
 4  See  Policies  and  Rules  Concerning  Interstate  900  Telecommunications  Services,  CC  Docket  No.  91-  65,  Report  and 
 Order,  6  FCC  Rcd  6166  (1991),  recon.,  8  FCC  Rcd  2343  (1993).  5 
 47  C.  F.  R.    64.711,  regulating  the  preamble  requirements,  was  repealed  once  the  preamble  requirement  of  the  Federal  Trade  Commission  took  effect.  See  Policies  and  Rules  Implementing  the  Telephone  Disclosure  and  Dispute 


 Resolution  Act,  CC  Docket  No.  93-  22,  RM  7990,  Report  and  Order,  8  FCC  Rcd  6885,  6904,  para.  108  (1993)  (First  TDDRA  Order).  47  C.  F.  R.    64.  713  and  714  were  amended  and  renumbered  as  47  C.  F.  R.    64.  1507  and  1508.  See 
 First  TDDRA  Order,  8  FCC  Rcd  at  6906-  7  (Appendix  B).  6 
 The  Telephone  Disclosure  and  Dispute  Resolution  Act  of  1992,  which  added  section  228  to  the  Communications  Act  of  1934,  Pub.  L.  No,  192-  556,  106  Stat.  4181  (1992)  (codified  at  47  U.  S.  C.    228).  Section  228  defines  pay-  per-call 


 as,  any  service  providing  1)  a)  audio  information/  entertainment,  or  b)  access  to  simultaneous  voice  conversation,  or  c)  any  service    including  the  provision  of  a  product    where  the  charges  are  assessed  on  the  basis 
 of  completion  of  the  call;  2)  for  which  the  caller  pays  a  per-  call  or  per-  time  charge  greater  than  or  in  addition  to  the  charge  for  transmission  of  the  call;  and  3)  which  is  accessed  through  the  use  of  a  900  number  or  other  number 
 designated  by  the  Commission.  47  U.  S.  C.    228(  i)(  1).  7 
 The  Commissions  regulations  imposed  obligations  and  constraints  on  carriers  that  transmit  or  bill  for  such  services,  while  the  FTCs  authorizing  statute  covered  the  activities  of  information  providers  that  produce  pay-  per-call 


 programs  and  other  entities,  including  common  carriers,  that  perform  pay-  per-  call  billing  and  collection.  See  15  (continued....) 
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 TDDRA  also  mandated  explicit  restrictions  on  the  use  of  800  and  other  toll-  free  numbers.  8 
 5.  In  1993,  the  Commission  initiated  a  pay-  per-  call  proceeding  to  implement  TDDRA.  9  The  Commission  adopted  new  regulations,  and  clarified  that  while  all  interstate  services  within  the  definition 


 of  pay-  per-  call  must  be  provided  through  900  numbers  and  any  numbers  it  reserved  for  such  services,  audiotext  information  services  outside  the  pay-  per-  call  definition  could  be  offered  through  other 
 numbers.  10  TDDRA  specifically  exempted  several  services  from  the  pay-  per-  call  definition,  and  therefore  from  the  limitation  of  which  prefixes  they  could  be  offered  over:  1)  certain  directory  services,  2)  tariffed 
 services,  and  3)  services  for  which  users  are  assessed  charges  only  after  entering  into  a  presubscription  or  comparable  arrangement.  11  The  Commission  defined  presubscription  and  comparable  arrangements 
 in  a  way  intended  to  prevent  instant  agreements  which  would  circumvent  consumer  protections.  12  TDDRA  also  included  restrictions  on  the  use  of  toll-  free  numbers  to  charge  callers,  and  similarly  had  an 
 exception  for  preexisting  agreements  and  the  use  of  credit  or  charge  cards.  In  1996,  when  Congress  revised  the  governing  statute,  section  228,  the  Commission  closed  the  TDDRA  proceeding  and  opened  a 
 new  proceeding  to  implement  the  revisions.  13 
 B.  Telecommunications  Act  of  1996 
 6.  The  exceptions  and  exclusions  of  TDDRA  created  incentives  for  audiotext  information  providers  to  tailor  services  to  avoid  the  pay-  per-  call  regulation.  14  In  response,  Congress  revised  section 


 228  in  the  1996  Act  to  strengthen  consumer  protections.  Among  its  revisions,  Congress  removed  the  exemption  for  tariffed  services.  15  It  expanded  restrictions  on  the  use  of  toll-  free  numbers  to  charge 
 callers  16  and  gave  common  carriers  authority  to  terminate  such  service  for  audiotext  information  service 


 (...  continued  from  previous  page) 
 U.  S.  C.    5711(  c)  and  5721(  c)  (each  stating  that  communications  common  carriers  shall  be  subject  to  the  jurisdiction  of  the  Commission  for  the  purposes  of  [those  subchapters]). 
 8  47  U.  S.  C.    228(  c)(  7). 
 9  First  TDDRA  Order,  8  FCC  Rcd  6885. 
 10  See  Policies  and  Rules  Implementing  the  Telephone  Disclosure  and  Dispute  Resolution  Act,  CC  Docket  No.  93- 
 22,  Order  on  Reconsideration  and  Further  Notice  of  Proposed  Rule  Making,  9  FCC  Rcd  6891,  para.  1  (1994)  (TDDRA  Order  &  FNPRM).  In  the  TDDRA  Order  &  FNPRM,  the  Commission  also  proposed  to  amend  our 


 regulations  to  give  telephone  subscribers  greater  protection  from  fraudulent  and  deceptive  practices  associated  with  the  use  of  800  numbers  to  provide  information  services.  See  generally  id. 
 11  See  47  U.  S.  C.    228(  i)(  2).  The  tariffed  services  exemption  was  removed  when  Congress  revised  the  governing 
 statute,  section  228,  with  the  enactment  of  the  1996  Act.  See  1996  Order  &  NPRM,  11  FCC  Rcd  at  14749,  para.  33.  12 
 For  example,  47  C.  F.  R.    64.  1501(  b),  at  that  time,  included  the  provision  that  any  such  arrangement  must  use  a  credit  or  charge  card  subject  to  the  dispute  resolution  procedures  of  the  Truth  in  Lending  Act  and  Fair  Credit  Billing 


 Act.  A  similar  protection  was  adopted  by  the  FTC.  See  16  C.  F.  R.    308.2(  e).  13 
 See  1996  Order  &  NPRM,  11  FCC  Rcd  at  14739,  para.  2.  (  We  previously  issued  a  Further  Notice  of  Proposed  Rule  Making  in  CC  Docket  No.  93-  22  to  propose  new  rules  to  correct  abuses  involving  presubscribed  information 


 services  and  the  use  of  800  and  other  toll  free  numbers  to  charge  subscribers  for  information  services.  Because  the  requirements  of  the  1996  Act  accomplish  the  same  goals  as  our  TDDRA  FNPRM  proposals,  we  are  terminating  CC 
 Docket  No.  93-  22.)  (citations  omitted).  14 
 See  generally  1996  Order  &  NPRM,  11  FCC  Rcd  14738;  see  also  id.  at  14740-  43,  paras.  5-  12.  15 
 47  U.  S.  C.    228(  i);  see  also  1996  Order  &  NPRM,  11  FCC  Rcd  at  14749,  para.  33.  16 
 The  1996  Act  added  a  new  prohibition  on  the  calling  party  being  assessed,  by  virtue  of  being  asked  to  connect  or  otherwise  transfer  to  a  pay-  per-  call  service,  a  charge  for  the  call  to  a  toll-  free  number.  See  47  U.  S.  C.   


 (continued....) 
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 providers  who  violated  provisions  of  the  statute.  17  The  1996  Act  also  noted  that  the  remedies  specified  in  section  228  are  in  addition  to  any  other  remedies  available  under  the  Commissions  forfeiture  authority.  18 
 C.  FCC  Rules  and  Rulemakings 
 7.  The  Commission  revised  its  rules  to  implement  the  amended  section  228  in  its  1996  Order  &  NPRM.  19  In  doing  so,  the  Commission  incorporated  many  parts  of  section  228  directly.  In 


 addition,  the  Commission  proposed  new  rules  at  that  time  intended  to  address  potential  circumvention  of  the  regulations.  The  proposals  targeted  the  use  of  non-  900  numbers  to  provide  what  appear  to  be,  in  all 
 other  respects,  pay-  per-  call  services;  the  use  of  instant  agreements  and  credit  cards  to  take  advantage  of  exemptions;  and  the  effectiveness  of  toll-  free  protections.  20  The  comments  and  reply  comments  in 
 response  to  the  1996  Order  &  NPRM  were  due  in  August  and  September  1996,  before  the  revised  rules  themselves  took  effect  in  December  1996.  21  On  March  17,  2003,  the  Consumer  &  Governmental  Affairs 
 Bureau  (CGB)  issued  a  Public  Notice  seeking  to  refresh  the  record  in  this  proceeding.  22 
 III.  NOTICE  OF  PROPOSED  RULEMAKING 
 A.  Background 
 8.  Section  228  establishes  a  system  of  oversight  and  regulation  of  pay-  per-  call  services  and  also  related  audiotext  information  services  to  protect  consumers.  23  Pay-  per-  call  service  is  defined  in 


 section  228  as: 
 any  service  (A)  in  which  any  person  provides  or  purports  to  provide(  i)  audio  information  or  audio  entertainment  produced  or  packaged  by  such  person;  (ii)  access  to 


 simultaneous  voice  conversation  services;  or  (iii)  any  service,  including  the  provision  of  a  product,  the  charges  for  which  are  assessed  on  the  basis  of  completion  of  the  call;  (B)  for 
 which  the  caller  pays  a  per-  call  or  per-  time-  interval  charge  that  is  greater  than,  or  in  addition  to,  the  charge  for  transmission  of  the  call;  and  (C)  which  is  accessed  through  use 
 of  a  900  telephone  number  or  other  prefix  or  area  code  designated  by  the  Commission  in  accordance  with  [another  section  228  provision].  24 


 (...  continued  from  previous  page) 
 228(  c)(  7)(  E).  It  also  prohibited  charges  without  written  agreements,  or  use  of  credit  or  charge  cards.  See  47  U.  S.  C.    228(  c)(  7)(  C).  And  it  added  a  requirement  for  the  use  of  Personal  Identification  Numbers  when  written  agreements 
 are  used.  47  U.  S.  C.    228(  c)(  8)(  C).  17 
 47  U.  S.  C.    228(  c)(  8)(  E).  See  also  47  U.  S.  C.    228(  e)  (limiting  carrier  liability  for  such  terminations).  18 
 47  U.  S.  C.    228(  c)(  8)(  F).  19 
 1996  Order  &  NPRM.  20 
 1996  Order  &  NPRM,  11  FCC  Rcd  at  14751-  54,  paras.  39-  45.  21 
 See  Rules  and  Regulations  Federal  Communications  Commission  47  C.  F.  R.  Part  64  Interstate  Pay-  Per-  Call  and  Other  Information  Services,  Final  Rule,  61  FR  39084-  01  (July  26,  1996). 


 22  The  Consumer  &  Governmental  Affairs  Bureau  Seeks  Comment  to  Refresh  the  Record  on  the  Commissions  Rules 
 Governing  Interstate  Pay-  Per-  Call  &  Other  Information  Services,  CC  Docket  No.  96-  146,  Public  Notice,  DA  No.  03-  807  (rel.  March  17,  2003)  (2003  Notice). 


 23  For  example,  there  are  disclosure  and  billing  requirements  designed  to  protect  consumers. 
 24  47  U.  S.  C.    228(  i)(  1). 
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 9.  Currently,  the  Commission  has  not  designated  any  other  telephone  number,  prefix  or  area  code  beyond  900  numbers  as  pay-  per-  call  services.  25  As  previously  stated,  section  228  addresses  broader 
 issues  than  the  terms  900-  number  services  and  pay-  per-  call  services.  For  example,  the  statute  has  criteria,  implemented  by  Commission  rules,  which  govern  the  manner  in  which  information  outside  the 
 pay-  per-  call  definition  can  be  provided  via  toll-  free  numbers  for  a  fee.  26  Therefore,  we  use  the  term  audiotext  information  services  to  refer  to  the  broader  umbrella  of  services  related  to  pay-  per-  call.  We 
 note  that  the  term  pay-  per-  call  is  a  subset  of  audiotext  information  services  as  we  now  use  that  term.  27 
 B.  Discussion 
 1.  Toll-  free  Numbers 
 10.  The  Commissions  rules,  which  implement  the  statute  virtually  verbatim,  have  detailed  criteria  that  must  be  met  in  the  limited  circumstances  under  which  calls  involving  toll-  free  numbers  can 


 be  used  for  purchases  of  goods  and  services,  including  audiotext  information  services.  Our  rules  and  the  statute  already  require  common  carriers,  including  small  carriers,  to  use  contracts  or  tariffs  to  prohibit 
 their  customers  from  using  800  numbers  in  ways  that  are  thought  to  leave  consumers  without  the  benefit  of  protections  against  fraud.  For  example,  carriers  must  prohibit  the  use  of  800  numbers,  or  any  other 
 numbers  advertised  or  widely  understood  to  be  toll-  free,  in  a  way  that  the  calling  party  is  charged  for  information,  with  limited  exception.  28  There  are  exceptions  for  charges  where  there  are  presubscription 
 agreements  or  use  of  certain  credit  and  charge  cards.  29  The  only  way  to  have  information  charges  that  appear  on  a  consumers  phone  bill  is  through  a  presubscription  agreement  which  in  most  cases  must  be  in 
 writing,  include  specific  disclosures,  and  use  personal  identification  numbers  for  access  to  the  service.  30 
 11.  However,  despite  these  protections,  the  Commission  continues  to  receive  complaints  in  this  area.  In  the  first  six  months  of  2004,  the  Commission  received  close  to  5,000  complaints  that 


 referenced  toll-  free  numbers.  31  We  are  interested  in  finding  out  why,  with  these  protections,  there  are  still  complaints  in  this  area.  For  example,  are  there  many  problems  for  consumers  when  charge  cards  are  used 
 for  payment?  32  Do  more  problems  occur,  for  example,  when  the  written  agreement  does  not  require  the  use  of  a  personal  identification  number?  33  We  seek  comment  on  possible  solutions. 


 25  See  47  C.  F.  R.    64.  1506. 
 26  See,  e.  g.,  47  U.  S.  C.    228(  c)(  7)(  C);  47  C.  F.  R.    64.  1504. 
 27  Contrast  Telephone  Publishing  Corporation  and  Telemedia  Network,  Inc.  D/  B/  A  International  Telnet,  File  No. 
 ENF-  97-  02,  Notice  of  Apparent  Liability  for  Forfeiture,  NAL/  Acct.  No.  716EF0001,  12  FCC  Rcd  21,  384  at  21,  385  (1997)  (  Pay-  per-  call  services,  also  known  as  audiotext  or  900  services,  provide  telephone  users  with  a  variety  of 


 recorded  and  interactive  information  programs  for  which  they  are  charged  rates  different  from,  and  usually  higher  than,  the  normal  transmission  rates  for  ordinary  telephone  calls.) 
 28  47  U.  S.  C.    228(  c)(  7);  47  C.  F.  R.    64.  1504. 
 29  47  U.  S.  C.    228(  c)(  7);  47  C.  F.  R.    64.  1504. 
 30  47  U.  S.  C.    228(  c)(  7)-(  9);  47  C.  F.  R.    64.  1504.  Excused  from  the  specific  criteria  for  the  written  agreement  are 
 calls  using  telecommunications  devices  for  the  deaf,  certain  directory  services,  and  the  purchase  of  goods  or  services  that  are  not  information  services.  47  U.  S.  C.    228(  c)(  8)(  D);  47  C.  F.  R.    64.  1504(  f)(  1). 


 31  There  were  4,933  complaints  received  during  approximately  the  first  six  months  of  calendar  year  2004  that 
 referenced  toll-  free  numbers,  but  not  all  of  these  necessarily  involved  toll-  free  related  issues.  32 
 See  47  U.  S.  C.    228(  c)(  9);  47  C.  F.  R.    64.  1504(  c)(  2).  33 
 See  47  U.  S.  C.    228(  c)(  8)(  C)  and  (D);  47  C.  F.  R.    64.  1504(  f)(  1). 
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 a.  Protection  for  Line  Subscribers  as  well  as  Callers 
 12.  Section  228  and  our  rules  governing  toll-  free  calls  explicitly  protect  the  calling  party  from  being  charged  for  information  conveyed  during  the  call  unless  meeting  the  criteria  discussed 


 above.  34  In  the  1996  Order  &  NPRM,  the  Commission  discussed  the  possibility  of  extending  the  toll-  free  number  protections  that  apply  to  the  calling  party,  so  that  they  also  apply  to  the  subscriber  to  the 
 originating  line.  35  We  believe  this  proposal  is  still  valid  today.  For  directly-  dialed  toll  calls  placed  without  a  calling  card,  it  is  the  subscriber    not  necessarily  the  calling  party    who  is  assessed  charges  for 
 calls  placed  over  that  line.  It  would  not  seem  appropriate  for  an  individual  calling  a  toll-  free  number  to  be  protected  from  incurring  charges  without  extending  the  same  protection  to  the  individual  or  entity  billed 
 for  the  calls.  We  seek  comment  on  whether  we  should  amend  section  64.1504  of  our  rules  explicitly  to  protect  the  subscriber  as  well  from  the  practices  that  Congress  has  chosen  to  prohibit.  Would  such  an 
 amendment  help  to  protect  small  businesses  from  calls  made  by  employees? 
 b.  Use  of  Number  Identification  for  Billing  through  Toll-  Free  Numbers 
 13.  Section  228(  c)(  7)(  A)  of  the  1996  Act  prohibits  the  calling  party  being  assessed,  by  virtue  of  completing  the  call  [to  a  toll-  free  number],  a  charge  for  the  call.  36  In  the  1996  Order  &  NPRM, 


 the  Commission  adopted  a  rule  that  mirrors  that  portion  of  section  228  and  also  prohibits  such  conduct.  37  In  order  to  assess  charges  for  directly  dialed  toll  calls,  common  carriers  identify  the  telephone  line  used  to 
 originate  a  toll  call  and  assess  charges  to  the  subscriber  to  that  line.  The  Commission  generally  has  held  telephone  subscribers  responsible  for  toll  charges  resulting  from  unauthorized  use  of  their  telephone 
 lines.  38  However,  in  the  past,  the  Commission  has  received  complaints  that  parties  were  using  such  information  to  bill  callers  for  services  from  calls  made  to  toll-  free  numbers.  39 


 14.  In  the  1996  Order  &  NPRM,  the  Commission  also  tentatively  concluded  that  a  carriers  billing  of  calls  dialed  to  800  or  other  toll-  free  numbers  on  the  basis  of  one  such  technology,  Automatic 
 Number  Identification  (ANI),  amounted  to  assessing  charges  on  the  basis  of  completion  of  the  call,  and  therefore  violated  section  228(  c)(  7)(  A)  of  the  Act,  unless  the  call  involved  use  of  telecommunications 
 devices  for  the  deaf.  40  At  that  time,  commenters  generally  agreed  that  a  carriers  billing  of  toll-  free  calls 


 34  See  47  U.  S.  C.    228(  c)(  7)(  C)  and  (c)(  8)-(  9);  see  also  47  C.  F.  R.    64.  1504. 
 35  1996  Order  &  NPRM,  11  FCC  Rcd  at  14753,  para.  44.  The  calling  party  could  be  someone  other  than  the 
 subscriber,  for  example,  a  visitor  to  the  subscribers  home.  36 
 47  U.  S.  C.    228(  c)(  7).  37 
 47  C.  F.  R.    64.1504(  c).  38 
 See,  e.  g.,  Gerri  Murphy  Realty,  Inc.  v.  AT&  T  Corp.,  File  No.  EB-  01-  TC-  F008,  Memorandum  Opinion  and  Order,  16  FCC  Rcd  19134  (2001). 


 39  See  1996  Order  &  NPRM,  11  FCC  Rcd  at  14740-  41,  paras.  6-  7. 
 40  The  term  ANI  refers  to  the  delivery  of  the  calling  partys  billing  number  by  a  local  exchange  carrier  to  any 
 interconnecting  carrier  for  billing  or  routing  purposes,  and  to  the  subsequent  delivery  to  end  users.  See  47  C.  F.  R.    64.  1600(  b).  See  also  1996  Order  &  NPRM,  11  FCC  Rcd  at  14754,  para.  45.  Telecommunications  devices  for  the 


 deaf  utilize  ANI  to  identify  the  telephone  subscriber  to  be  billed.  The  Commission  also  made  a  tentative  conclusion  that  ANI-  based  billing  also  violates  201(  b)  in  the  1996  Order  &  NPRM.  See  1996  Order  &  NPRM,  11  FCC  Rcd  at 
 14754,  para.  45;  see  also  47  U.  S.  C.    228(  c)(  7),  47  C.  F.  R.    64.  1504(  c),  and  47  U.  S.  C.    201(  b).  Section  201(  b)  requires  that  all  charges  and  practices  for  and  in  connection  with  any  common  carrier  communications  services  be 
 just  and  reasonable. 
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 on  the  basis  of  ANI  violated  the  statute.  41  In  the  interests  of  collecting  a  more  complete  record  to  include  newer  technology,  we  now  seek  comment  on  whether  we  should  specifically  prohibit  billing  calls  dialed 
 to  800  or  other  toll-  free  numbers  on  the  basis  of  not  just  ANI,  but  equivalent  information,  automatically  provided  calling  number  identification.  42 


 2.  Audiotext  Information  Services,  Including  Pay-  Per-  Call  Services 
 a.  Consumer  Protection  in  General 
 15.  The  Commissions  rules  governing  pay-  per-  call  services  are  meant  to  be  a  framework  of  consumer  protections  for  these  audiotext  information  services.  The  rules  require,  first,  that  consumers  are 


 given  appropriate  information,  such  as  pricing,  so  they  can  make  informed  decisions  about  services.  43  Second,  consumers  are  meant  to  be  able  to  choose  to  block  unwanted  access  to  the  pay-  per-  call  services, 
 for  free  or  at  a  reasonable  cost.  44  And  third,  consumers  are  supposed  to  be  protected  from  losing  local  or  long-  distance  services  for  nonpayment  of  charges  for  pay-  per-  call  services.  45  However,  we  are  concerned 
 that  as  audiotext  information  services  have  migrated  increasingly  outside  the  pay-  per-  call  setting,  consumers,  including  small  business  consumers,  have  lost  some  of  these  basic  protections.  46 


 16.  Consumer  disclosure  requirements  for  audiotext  information  services  only  apply  to  services  over  900  numbers,  and,  as  above,  some  calls  over  toll-  free  numbers.  47  Similarly,  alternative 
 dialing  routes  circumvent  subscriber  blocking,  allowing  even  children  to  obtain  access  to  audiotext  information  services.  48  Additionally,  consumers  calls  are  sometimes  rerouted  without  their  authorization 
 through  specialized  long-  distance  carriers  designed  to  accumulate  high  rates  for  what  are  advertised  as 


 41  See,  e.  g.,  AT&  T  Corp.  1996  Comment  at  3,  FPSC  1996  Comment  at  5,  GTE  1996  Comment  at  3,  MCI  1996 
 Comment  at  5,  NAAG  1996  Comment  at  8,  Pacific  Bell/  Nevada  Bell  1996  Comment  at  9,  University  of  Missouri-Columbia  1996  Comment  at  5,  Young  Families  1996  Comment  at  3.  Unless  otherwise  noted,  Comment  refers  to 


 items  filed  in  CC  Docket  96-  146.  42 
 See,  e.  g.,  47  C.  F.  R.    64.  1600(  d)  (charge  number    conveying  similar  information  in  a  System  7  environment).  43 
 The  Commission  rules  require  carriers  themselves  to  disclose  information,  and/  or  to  require  disclosure  through  contract  or  tariff.  See  47  C.  F.  R.    64.  1502,  1504,  and  1509.  The  rules  require  compliance  with  Titles  II  and  III  of 


 TDDRA,  and  the  FTCs  implementing  rules.  See  16  C.  F.  R.    308.  5  (FTCs  rules  relating  to  pay-  per-  call).  44 
 47  U.  S.  C.    228(  c)(  5).  See  also  47  C.  F.  R.    64.  1508.  45 
 47  U.  S.  C.    228(  c)(  4).  See  also  47  C.  F.  R.    64.  1507.  46 
 See  infra  paras.  22-  23.  During  approximately  the  first  six  months  of  2004,  the  Commission  received  at  least  275  complaints  referring  to  900  numbers  themselves.  Because  of  the  complex  nature  of  some  dial-  around  calls,  more 


 complaints  stemming  from  unauthorized  charges  appearing  on  the  telephone  bills  could  be  amongst  the  thousands  of  complaints  the  Commission  receives  about  cramming  or  billing  disputes.  See,  e.  g.,  Long  Distance  Direct,  Inc., 
 Apparent  Liability  for  Forfeiture,  File  No.  ENF-  99-  01,  Memorandum  Opinion  and  Order,  15  FCC  Rcd  3297  (2000)  (forfeiture  for  membership  to  psychic  hotline  and  other  charges  placed  on  telephone  bills  for  enhanced  services 
 categorized  as  cramming  prohibited  under  section  201(  b)).  47 
 See  47  C.  F.  R.    64.  1504  and  1509.  See  also  supra,  para.  10.  48 
 While  a  consumer  might  block  900  numbers  from  being  dialed  from  her  household,  the  block  does  not  prevent  anyone  from  dialing  non-  900  numbers  even  if  those  provide  access  to  audiotext  information  services  the  consumer 


 is  trying  to  stop.  For  example,  in  June  2003,  the  father  of  a  12-  year-  old  Internet  user  complained  to  the  FCC  that  he  had  received  a  bill  for  $289  in  long-  distance  calls  despite  having  blocked  long-  distance  calls  and  having  denied  his 
 son  the  charge  cards  for  purchases  over  the  Internet.  I  had  no  idea  that  while  surfing  the  Internet,  a  company  could  trace  back  to  our  home  telephone  number  and  add  a  charge  to  our  telephone  bill.  Is  that  legal?  As  a  parent,  how  do 
 I  control  such  charges?  the  Salt  Lake  City  man  asked. 
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 free  information  services.  Under  those  conditions,  consumers  can  end  up  being  disconnected  for  what  are  essentially  services  that  arguably  should  be  covered  by  pay-  per-  call  protections.  In  this  rulemaking  we 
 explore  several  of  these  areas,  and  seek  comment  on  the  best  way  to  address  concerns  of  consumers,  without  hindering  legitimate  businesses,  including  small  and  new  businesses. 


 17.  One  such  example  of  an  item  outside  the  standard  pay-  per-  call  application  is  a  phenomena  known  informally  as  modem  hijacking.  The  Commission  has  received  complaints  about 
 local  calls  which  are  redirected  without  the  callers  authorization  through  software  programs,  which  disconnects  Internet  users  calls  and  dial  international  numbers  often  through  carriers  other  than  those 
 chosen  by  subscribers  for  their  long-  distance  calls.  49  Sometimes  there  is  no  way  to  disconnect  the  call  other  than  to  unplug  the  telephone  line.  Furthermore,  the  placement  of  a  call  to  an  international  telephone 
 number  in  situations  like  this  does  not  necessarily  mean  it  connects  through  the  country  to  which  it  is  assigned.  50 


 18.  Although  the  FTC  has  addressed  some  cases  in  this  area,  51  we  seek  comment  on  whether  additional  actions  are  needed  from  the  FCC.  We  invite  commenters  to  offer  specific  proposals  consistent 
 with  our  section  228  authority.  We  have  on  a  case-  by-  case  basis  looked  at  some  parameters  of  using  201(  b)  to  review  certain  relationships  between  carriers  and  information  providers  in  chat-  line  cases.  52  We 
 seek  comment  on  the  broader  policy  of  what  factors  and  concerns  we  should  take  into  account  in  making  decisions  regarding  the  broad  practices  and  conduct  in  this  general  area,  including  whether  we  should 
 consider  revoking  carriers  section  214  certification  for  such  conduct.  53  We  seek  comment  on  whether  consumers  should  be  given  protections  to  allow  call  disconnection. 


 b.  The  900  Number  Regime 
 19.  Section  228  also  requires  the  Commission  to  identify  procedures  that  common  carriers  and  pay-  per-  call  providers,  including  small  carriers  and  providers,  can  use  to  protect  against  nonpayment 


 49  In  2001,  the  Commission  began  separately  tracking  complaints  about  international  Internet  dial-  up  problems,  a 
 growing  complaint.  During  approximately  the  first  six  months  of  2004,  the  FCC  received  265  complaints  about  these  situations  in  which  telephone  subscribers  suddenly  found  their  local  phone  calls  for  Internet  access  redirected 


 through  international  channels  at  high  per-  minute  rates.  50 
 See  FTC  v.  Verity  Intl,  Ltd.,  124  F.  Supp.  2d  193,  195-  196  (S.  D.  N.  Y.  2003)  (charges  on  telephone  bill  as  calls  to  Madagascar  even  though  no  calls  were  actually  put  through  to  Madagascar).  An  international  common  carrier  was 


 prosecuted  by  the  FTC  after  a  dialer  computer  program  supplied  by  defendants  automatically  downloaded  to  the  users  computer,  disconnected  the  users  modem  from  its  Internet  Service  Provider,  and  placed  a  call  to  a 
 Madagascar  telephone  number  assigned  to  the  company.  The  company  received  revenue  from  those  calls,  even  if  terminated  outside  of  Madagascar. 
 51  See,  e.  g.,  FTC  v.  BTV  Industries,  Rik  Covell,  Adam  Lewis,  National  Communications  Team,  Inc.,  LO/  AD 
 Communications  Corp.,  and  Nicholas  Loader,  CV-  S-  02-  0437-  LHR-  PAL,  Complaint,  and  Temporary  Restraining  Order  (D  Nev.  2002)  (alleging  defendant  sent  e-  mail  messages  claiming  that  consumers  had  won  a  prize,  and  when 


 consumers  responded,  routing  the  calls  to  an  adult  Internet  site  via  a  900-  number  modem  connection  generating  high  per-  minute  rates).  In  that  case,  the  FTC  alleged  that  the  defendants  practices  were  deceptive  and  misleading  by, 
 among  other  things,  leading  consumers  to  believe  that  the  connection  to  the  web  site  was  toll-  free.  See,  also,  FTC  v.  Verity  Intl,  Ltd.,  194  F.  Supp.  2d  270,  276  (S.  D.  N.  Y.  2002)  (FCC  supported  the  FTC  action  in  a  friend  of  the  court 
 brief).  52 
 See  infra  paras.  29-  32.  See,  e.  g.,  Beehive  v.  AT&  T,  17  FCC  Rcd  11641  (2002);  AT&  T  Corp.  v.  Jefferson  Telephone  Co.,  Memorandum  Opinion  and  Order,  16  FCC  Rcd  16130  (2001)  (Jefferson). 


 53  See  47  U.  S.  C.    214. 
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 of  legitimate  charges.  54  Pay-  per-  call  providers  have  recently  commented  that  audiotext  information  service  providers  have  moved  outside  the  900  number  regime  because  it  has  become  a  difficult 
 environment  in  which  to  operate.  55  In  addition,  AT&  T  Corp.  noted  that  pay-  per-  call  providers  may  avoid  federal  regulation  by  using  revenue  sharing  agreements  and  instant  credit  to  mask  services  that  otherwise 
 would  be  regulated  as  pay-  per-  call.  56 
 20.  The  use  of  900  numbers  has  dropped  dramatically  in  the  past  five  years.  For  example,  the  number  of  assigned  900  numbers,  which  peaked  in  1999  with  447  distinct  900  NXX  codes,  57  had 


 dropped  to  206  by  the  end  of  2002.  58  Many  of  those  numbers  are  not  actually  used  by  end  users.  59  Many  carriers  decline  to  provide  transport  or  bill  for  900  numbers.  60  Further,  some  pay-  per-  call  providers 
 claimed  that  carriers  forgive  disputed  pay-  per-  call  charges  repeatedly  for  the  same  subscribers  without  instituting  900  number  blocking  in  those  cases.  61  One  participant  expressed  concern  that  the  health  of  the 
 900  number  rules,  if  applicable,  is  crucial  to  market  and  consumer  confidence.  62  Clearly  the  Commission  does  not  want  to  direct  pay-  per-  call  providers  to  a  system  that  does  not  function.  We  seek  comment  on 


 54  47  U.  S.  C.    228(  b)(  4). 
 55  See,  e.  g.,  Network  for  Online  Commerce  2003  Comment  at  8,  Pilgrim  Telephone,  Inc.  2003  Comment  at  2,  HFT, 
 Inc.,  Lo-  Ad  Communications  T.  B.  I.  and  Global  Charge  2003  Joint  Comment  at  13-  14,  Simpson  2003  Comment  at  2. 


 56  See  AT&  T  Corp.  2003  Comment  at  7  (alleging  abusive  compensation  sharing  arrangements  involving  audiotext 
 information  service  providers).  57 
 In  2001,  there  were  228  assigned.  In  2000  the  number  was  311,  which  is  the  2001  number  minus  one  new  code  assigned  in  2001,  plus  the  84  reclaimed  in  2001.  The  1999  total  was  445,  as  none  were  assigned  in  2000  when 


 another  134  were  reclaimed.  See  NANPA  2001  Annual  Report  at  13  (North  American  Numbering  Plan  Administration)  (available  at  <www.  nanpa.  com/  reports/  reports_  annual.  html>). 
 58  NANPA  2002  Annual  Report  at  8  (available  at  <www.  nanpa.  com/  reports/  reports_  annual.  html>). 
 59  National  carriers  reported  recently  that  for  about  half  of  the  900  NXX  codes  they  hold,  no  more  than  35%  of  those 
 numbers  are  actually  used  by  end  users.  See,  FCC  Releases  Telephone  Numbering  Resource  Utilization  Report,  Federal  Communications  Commission,  Table  9  (July  2003)  (Number  Utilization  for  Specialized  Nongeographic 


 Area  Codes  as  of  December  31,  2002).  Canada  held  62  of  the  codes,  therefore,  no  more  than  144  could  be  held  by  national  carriers,  which  reported  utilization  information  for  only  65  of  the  codes.  Utilization  data  showed  that  63.  5 
 percent  of  those  were  still  available  for  use.  Carriers  are  required  to  report  numbering  usage  data.  See  Numbering  Resource  Optimization,  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd  7574  (2000). 
 60  Commenters  stated  that  AT&  T  Corp.  abandoned  billing  for  most  services  and  notified  customers  that  they  will  be 
 discontinuing  transport  as  of  December  31,  2003.  (Network  for  Online  Commerce  2003  Comment  at  7,  Pilgrim  Telephone,  Inc.  2003  Comment  at  28).  Commenters  stated  that  MCI  does  not  accept  new  applications  for  service, 


 and  only  provides  services  through  a  few  brokers.  (Network  for  Online  Commerce  2003  Comment  at  8).  Commenters  stated  that  Sprint  closed  its  900  telemedia  office  almost  10  years  ago  (HFT,  Inc.,  Lo-  Ad 
 Communications  T.  B.  I.  and  Global  Charge  2003  Joint  Comment  at  13-  14  n.  7).  In  1998,  Verizon  asked  the  New  York  Public  Service  Commission  to  allow  it  to  end  services  to  pay-  per-  call  information  providers  because  it  no 
 longer  wished  to  provide  billing  and  collection  service,  and  because  usage  had  declined.  Chladek  v.  Verizon  N.  Y.  Inc.,  No.  02  Civ  2355(  RO),  2003  WL  21305347  at  1  (S.  D.  N.  Y.  2003)  (also  citing  Y2K  concerns). 
 61  See,  e.  g.,  Northwest  Nevada  Telco  2003  Comment  at  1,  MicroVoice  Applications,  Inc.  2003  Comment  at  2;  see 
 also  47  C.  F.  R.    64.  1511  and  1512.  As  noted  in  the  First  TDDRA  Order,  Congress  specifically  cited  the  example  of  a  consumer  who  has  chronic  complaints  about  pay-  per-  call  transactions  as  an  example  of  when  involuntary 


 blocking  could  be  appropriately  applied.  See  First  TDDRA  Order,  8  FCC  Rcd  6885  at  6901  n.  148.  62 
 See  Letter  from  Peter  J.  Brennan,  Mobile  Entertainment  Forum,  to  Marlene  Dortch,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  145  (filed  October  28,  2003)  (Ex  Parte  filing,  Mobile 


 Entertainment  Forum). 
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 what  steps  can  be  taken  to  ensure  the  900  number  regime  functions  properly. 
 21.  One  commenter  noted  that  a  practice  used  in  the  United  Kingdom  requiring  pay-  per-  call  providers  to  record  the  customers  voice  greatly  reduced  disputes  over  charges.  63  We  seek  comment  on 


 whether  it  would  be  appropriate  to  allow  carriers  to  accept  recordings  of  customers  oral  verification  that  they  understand  and  agree  to  the  charges  as  evidence  that  charges  should  not  be  forgiven.  We  seek 
 comment  from  pay-  per-  call  providers  on  whether  such  items  would  be  necessary. 
 c.  Presubscription  or  Comparable  Arrangement 
 22.  As  noted  previously,  the  Commission  requires  services  meeting  the  pay-  per-  call  definition  to  be  accessed  only  through  900  numbers,  and  the  only  ways  that  audiotext  information 


 services  fall  outside  the  pay-  per-  call  definition,  and  therefore  the  requirement  that  they  be  offered  only  over  900  numbers,  are  1)  by  being  directory  services  as  described  in  the  statute,  or  2)  to  have  charges 
 assessed  only  after  there  is  a  presubscription  or  comparable  agreement.  64  In  the  1996  Order  &  NPRM,  the  Commission  sought  comment  on  refining  the  definition  of  presubscription  and  comparable  agreement 
 so  that  it  is  clear  what  criteria  must  be  met  for  all  audiotext  information  services  other  than  directory  services  to  be  offered  over  numbers  outside  of  the  900  prefixes,  including  those  services  using  toll-  free 
 numbers.  65  Rather  than  having  the  Commission  designate  all  prefixes  as  pay-  per-  call  prefixes  to  ensure  protection  for  consumers,  the  Commission  proposed  to  make  clear  that  to  operate  outside  of  900  numbers, 
 all  audiotext  information  services  (other  than  directory  services)  must  either  have  presubscription  agreements  executed  in  writing  or,  alternatively,  require  that  payments  be  made  through  direct  remittance, 
 prepaid  account,  or  debit,  credit,  charge  or  calling  card.  For  example,  this  proposal  would  apply  such  protections  to  500  numbers,  700  numbers,  plain  old  telephone  service  and  international  numbers  when 
 used  to  provide  audiotext  information  services. 
 23.  We  again  seek  comment  on  the  usefulness  and  practicality  of  such  a  proposal.  In  particular,  we  ask  whether  this  proposal  would  be  adequate  to  balance  the  need  to  protect  consumers,  but 


 allow  businesses  to  develop.  In  particular,  how  would  this  proposal  effect  small  businesses?  Are  small  businesses  already  keeping  such  records?  In  addition,  we  seek  comment  on  whether  there  is  still  a  need 
 for  such  changes  in  this  area  given  developments  in  electronic  commerce  and  related  laws,  and  the  now-common  use  of  third-  party  verifications  in  telephone  transactions. 


 24.  We  also  seek  comment  on  whether  we  need  to  modify  our  existing  and  proposed  rules  given  our  obligations  under  the  Electronic  Signatures  in  Global  and  National  Commerce  Act  (E-  Sign 
 Act).  66  Under  the  E-  Sign  Act,  a  contract  or  business  transaction  cannot  be  denied  validity  or  enforceability  solely  because  the  contract  or  transaction  is  not  in  writing,  so  long  as  the  contract  or 
 transaction  is  a  properly  authenticated  electronic  record  or  has  been  affirmed  by  an  electronic  signature.  67  The  E-  Sign  Act  provides  a  specific  framework  for  the  use  of  electronic  records  and  signatures  and  places 


 63  Simpson  2003  Comment  at  1-  2  (stating  that  all  pay-  per-  call  calls  were  required  to  record  the  voice  of  the  caller  so 
 it  could  be  identified).  64 
 47  U.  S.  C.    228(  i)  and  (b)(  5).  65 
 See  47  U.  S.  C.    228(  i)(  2).  66 
 Electronic  Signatures  in  Global  and  National  Commerce  Act,  S.  761,  106th  Cong.,  2d  Sess.  (signed  into  law  June  30,  2000). 


 67  See  also  Implementation  of  the  Subscriber  Carrier  Selection  Changes  Provisions  of  the  Telecommunications  Act 
 of  1996,  Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers  Long  Distance  Carriers,  CC  Docket  No.  94-  129,  Third  Report  and  Order,  15  FCC  Rcd  15996,  at  16002-  03,  paras.  12-  14  (2000). 
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 limits  on  the  interpretation  authority  of  federal  and  state  regulatory  agencies  with  regard  to  this  framework.  We  seek  comment  on  how  we  might  best  adjust  our  current  and  proposed  requirements  for 
 presubscription  or  comparable  agreements  to  best  comply  with  the  E-  Sign  Act. 
 3.  Billing 
 25.  Section  228  and  our  rules  already  mandate  certain  billing  practices  for  pay-  per-  call  services  and  800  numbers  billed  via  the  telephone  bill.  68  Telephone  billing  of  subscribers  for  any  pay-per- 


 call  services  must  already  display  any  such  charges  in  a  part  of  the  subscribers  bill  that  is  identified  as  not  being  related  to  local  and  long  distance  telephone  charges,  and,  at  a  minimum,  describe  the  type  of 
 service,  the  amount  of  the  charge,  and  the  date,  time,  and  duration  of  the  call.  There  must  also  be  a  clearly-  identified  toll-  free  number  established  for  customers  to  call  with  any  questions.  69  For  toll-  free 
 numbers  used  to  bill  items  on  a  telephone  bill,  the  number  called  must  be  listed  clearly  with  a  disclaimer  in  prominent  type  that  neither  local  nor  long  distance  service  could  be  disconnected  for  failure  to  pay 
 disputed  charges  for  information  services.  70 
 26.  In  addition,  the  Commission  has  developed  rules  and  guidelines  in  the  Truth-  in-  Billing  proceeding  to  ensure  that  all  telephone  billing  is  readily  discernable  to  consumers.  71  In  general,  charges 


 must  be  accompanied  by  a  brief,  clear,  non-  misleading,  plain  language  description  of  the  service  or  services  rendered  that  allows  consumers  to  accurately  assess  that  the  services  for  which  they  are  billed 
 correspond  to  those  that  they  requested  and  received,  and  that  the  costs  conform  to  their  understanding  of  the  prices  charged.  72  The  Truth-  in-  Billing  Order  requires  that  telephone  bills  highlight  changes  in  or 
 additions  of  new  providers,  but  non-  recurring  pay-  per-  call  services  are  specifically  exempt  from  that  requirement.  73 


 27.  We  seek  comment  on  whether  our  existing  rules  governing  billing  specifically  for  pay-per-  call  services  and  those  for  charges  billed  through  toll-  free  numbers,  in  combination  with  our  Truth-  in-Billing 
 rules  and  guidelines,  are  sufficient  to  address  any  current  billing  concerns.  74  We  seek  comment  specifically  on  whether  we  should  adopt  a  rule  stating  that  charges  for  presubscribed  audiotext 
 information  services  accessed  through  toll-  free  numbers  must  be  displayed  separately  from  local  and  long-  distance  telephone  service.  75  How  would  such  a  rule  affect  small  carriers? 


 68  See  47  U.  S.  C.    228(  c)(  8)(  B)  and  (d)(  4);  see  also  47  C.  F.  R.    64.  1504,  1509  and  1510. 
 69  47  U.  S.  C.    228(  d)(  4);  see  also  47  C.  F.  R.    64.  1509(  b)  and  1510(  2). 
 70  47  U.  S.  C.    228(  c)(  8)(  D);  see  also  47  C.  F.  R.    64.  1510(  c). 
 71  See  47  C.  F.  R.    64.  2400-  2401;  see  also  Truth-  in-  Billing  and  Billing  Format,  CC  Docket  No.  98-  170,  First  Report 
 and  Order  and  Further  Notice  of  Proposed  Rule  Making,  14  FCC  Rcd  7492  (1999)  (Truth-  in-  Billing  Order).  72 
 47  C.  F.  R.    64.2401(  b).  See  also  Truth-  in-  Billing  Order.  73 
 Truth-  in-  Billing  and  Billing  Format,  Order  on  Reconsideration,  15  FCC  Rcd  6023,  at  6025,  para.  5  (2000)  (Truth-in-  Billing  Reconsideration). 


 74  We  note  that  the  Commissions  billing  rules  specifically  do  not  preempt  states  from  adopting  or  enforcing  their 
 own  consistent  rules.  47  C.  F.  R.    64.  2400(  b).  For  example,  Florida  has  adopted  a  rule  specifically  aimed  at  pay-per-  call  problems.  See  Policies  and  Rules  Implementing  the  Telephone  Disclosure  and  Dispute  Resolution  Act, 


 Florida  Public  Service  Commission  Notice  of  Withdrawal  of  Petition  to  Initiate  Rulemaking,  filed  January  26,  2004.  75 
 1996  Order  &  NPRM,  11  FCC  Rcd  at  14754-  55,  para.  46. 
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 4.  Revenue-  sharing  Arrangements 
 28.  The  definition  of  pay-  per-  call  services  found  in  section  228  rests  on  the  requirement  that  such  calls  are  only  those  calls  to  audiotext  information  services  for  which  the  caller  pays  a  per-  call  or  per-time- 


 interval  charge  greater  than  or  in  addition  to  the  charge  for  transmission  of  the  call.  76  Some  businesses  have  used  revenue-  sharing  arrangements  to  offer  for-  profit  audiotext  information  services 
 without  pay-  per-  call  regulation.  The  classic  scenario  is  when  an  audiotext  information  service  provider  does  not  charge  callers  for  the  service  outright,  but  instead  receives  a  commission  from  a  common  carrier 
 for  the  telephone  traffic,  which  might  be  charged  at  a  high  rate. 
 29.  In  the  1996  Order  &  NPRM,  the  Commission  sought  to  address  these  types  of  evasions  of  consumer  protections.  The  Commission  tentatively  concluded  that  certain  revenue-  sharing  arrangements 


 were  in  reality  charging  for  more  than  just  transmission  of  the  call,  even  if  the  caller  was  not  billed  separately  for  the  audiotext  information  service.  77  Specifically,  the  Commission  tentatively  concluded 
 that  any  form  of  remuneration  between  a  carrier  and  audiotext  information  services  provider  constituted  per  se  evidence  that  the  charge  levied  actually  exceeds  the  charge  for  the  transmission. 


 30.  Accordingly,  under  this  tentative  conclusion,  interstate  services  provided  through  such  an  arrangement  would  fit  within  the  pay-  per-  call  definition  and,  thus,  be  required  to  be  offered  exclusively 
 through  900  numbers.  78  The  1996  Order  &  NPRM  also  notes  a  staff  letter  which  discussed  several  hypothetical  scenarios  in  which  revenue-  sharing  arrangements  were  used  essentially  to  mask  audiotext 
 information  services  from  pay-  per-  call  regulation.  79  In  the  Marlowe  Letter,  the  staffs  opinion  was  that  such  scenarios  would  violate  both  section  228  and  section  201(  b).  80 


 31.  In  2001,  the  Commission  determined  that  the  existence  of  a  revenue-  sharing  arrangement  between  a  common  carrier  and  a  chat-  line  service  alone  did  not  demonstrate  that  a  carriers  conduct  was 
 unjust  and  unreasonable  under  section  201(  b).  81  Although  the  Commission  noted  in  Jefferson  that  it  was  not  addressing  the  application  of  section  228  to  such  a  situation,  the  decision  calls  into  question  our  basis 


 76  47  U.  S.  C.    228(  i)(  1)(  B).  Section  228  defines  pay-  per-  call  as,  any  service  providing  1)  a)  audio 
 information/  entertainment,  or  b)  access  to  simultaneous  voice  conversation,  or  c)  any  service    including  the  provision  of  a  product    where  the  charges  are  assessed  on  the  basis  of  completion  of  the  call;  and  2)  for  which  the 


 caller  pays  a  per-  call  or  per-  time  charge  greater  than  or  in  addition  to  the  charge  for  transmission  of  the  call.  47  U.  S.  C.    228(  i)(  1). 
 77  1996  Order  &  NPRM  at  14756,  para.  48.  The  Commission  based  its  tentative  conclusion  on  its  authority  under 
 section  154(  i),  and  addressed  circumvention  of  section  228  through  the  language  related  to  the  cost  of  transmission.  78 
 1996  Order  &  NPRM  at  14756,  para.  48.  79 
 1996  Order  &  NPRM  at  14742,  para.  10.  80 
 Letter  from  John  Muleta,  Chief  of  the  Common  Carrier  Enforcement  Bureau  at  that  time,  to  Ronald  Marlowe,  10  FCC  Rcd  10945,  DA  95-  1905  (September  1,  1995)  (Marlowe  Letter).  See  47  U.  S.  C.  201(  b).  Section  201(  b) 


 requires  all  charges  and  practices  for  and  in  connection  with  any  common  carrier  communications  services  be  just  and  reasonable.  See  also  infra,  para.  36. 
 81  Jefferson.,  16  FCC  Rcd  at  16136,  para.  13.  (2001)  (overruling  Marlowe  to  the  extent  that  it  was  not  consistent 
 with  the  conclusions  in  the  Order).  See  also  Beehive;  Jefferson;  AT&  T  Corp.  v.  Frontier  Communications  of  Mt.  Pulaski,  Inc.,  17  FCC  Rcd  4041  (2002)  (follows  Jefferson),  AT&  T  v.  Atlas  Telephone  Co.  and  Total 


 Telecommunications  Services,  Inc.,  16  FCC  Rcd  5726  (2001),  affd  in  part  and  remanded  sub  nom,  AT&  T  Corp.  v.  F.  C.  C.,  317  F.  3d  227  (D.  C.  Cir.  2003);  dismissed,  Atlas  Telephone  Co.  v.  AT&  T  Corp.,  File  No.  E-  97-  03,  Order,  18 
 FCC  Rcd  11533. 
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 for  our  prior  tentative  conclusion  in  the  1996  Order  &  NPRM.  82  Thus,  we  no  longer  reach  that  tentative  conclusion  here.  Instead,  we  invite  commenters,  including  small  carriers  and  small  audiotext  information 
 service  providers,  to  address  the  issue  of  revenue-  sharing  arrangements  in  light  of  the  Jefferson  decision.  Parties  should  discuss  whether  it  is  possible  or  appropriate  to  find  that  any  revenue-  sharing  arrangements 
 do  not  comply  with  sections  228  even  if  such  arrangements  would  not  violate  201(  b).  83 
 5.  New  and  Evolving  Services 
 a.  Definition  of  Exempted  Directory  Services 
 32.  Section  228  exempts  directory  services  from  the  definition  of  pay-  per-  call.  84  In  the  TDDRA  R&  O  implementing  section  228,  commenters  asked  the  Commission  to  interpret  the  definition  of 


 directory  services  to  include  only  basic  directory  services.  85  The  Commission  noted  that  a  common  carrier  also  operating  as  a  provider  of  audiotext  information  services  cannot  shield  its  information 
 services  from  pay-  per-  call  regulation  by  offering  them  through  a  directory  services  number.  86  In  2003,  some  commenters  stated  that  ambiguities  in  this  area  persist.  87  They  asked  that  the  Commission  clarify 
 that  enhanced  directory  services  were  exempt  from  pay-  per-  call.  88 
 33.  Examples  of  such  services  mentioned  in  the  comments  to  CC  Docket  No.  96-  146  include  such  things  as  a  service  that  allows  subscribers  to  access  directory  listings  by  category,  and  then  obtain 


 additional  information  about  the  listing,  upload  personal  contacts  into  a  private  database,  and  use  a  live  operator  to  access  their  own  personal  data.  Another  service  allows  wireless  subscribers  to  store  personal 
 address  books  on  a  network  server  and  have  voice-  activated  access  to  data  with  news,  receive  wake-  up  calls  and  get  travel  information  at  no  additional  charge.  Another  proposed  service  would  add  more 
 content  such  as  information  about  the  weather,  and  have  partnerships  with  businesses  to  allow  for  such  connections  as  transferring  customers  to  places  for  ticket  purchases. 


 34.  In  other  proceedings,  the  Commission  has  already  been  presented  with  questions  about  the  offering  of  directory  services  that  are  more  than  traditional  operator  provision  of  local  telephone 


 82  Jefferson,  16  FCC  Rcd  at  16133  n.  18. 
 83  We  note  that  commenters  have  brought  to  our  attention  legal  and  beneficial  revenue  sharing  arrangements  that 
 exist  in  the  telecommunications  industry  today.  See  Pilgrim  Telephone,  Inc.  2003  Comment  at  10  (saying  there  are  many  examples  in  which  carriers  have  compensation  arrangements  with  call  aggregators,  universities,  hospitals, 


 hotels  and  airports);  MicroVoice  Application  Inc.  2003  Comment  at  3  (  there  is  a  long  history  in  the  telecommunications  industry  for  providing  commissions  for  calls  generated  from  pay  phones,  hotels  and  motels, 
 shared  residences,  etc.);  AT&  T  Corp.  2003  Further  Comments  at  10  n.  10  (noting  as  legitimate  arrangements  Terminating  Switched  Access  Arrangements  (TSAAs)  for  high  volume,  international  settlements  required  to  be  paid 
 by  U.  S.  carriers  to  foreign  carriers,  and  commissions  paid  by  carrier  aggregators  for  operator  traffic).  84 
 47  U.  S.  C.    228(  i)(  2).  85 
 TDDRA  R&  O,  8  FCC  Rcd  at  6887,  para.  8.  86 
 TDDRA  R&  O,  8  FCC  Rcd  at  6887,  para.  9  n.  23.  87 
 Letter  from  Michael  B.  Hazzard,  on  behalf  of  Z-  Tel  Communications,  Inc.,  to  Marlene  H.  Dortch,  Secretary,  Federal  Communications  Commission,  CC  Docket  No.  96-  146,  at  2  (filed  May  27,  2003)  (Letter  from  Z-  Tel 


 Communications);  AWS  2003  Comment  at  6;  Metro  One  Telecommunications  2003  Reply  Comment.  88 
 The  Commissions  rules,  which  mirror  the  statutory  language,  do  not  speak  about  which  categories  of  services  fall  under  the  directory  services  exemption.  Instead,  the  exemption  just  states  that  pay-  per-  call  does  not  include 


 directory  services  provided  by  a  common  carrier  or  its  affiliate  or  by  a  local  exchange  carrier  or  its  affiliate  .  See  47  C.  F.  R.    64.  1501(  a)(  4);  see  also  47  U.  S.  C.    228(  i)(  2). 
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 numbering.  In  the  N11  numbering  proceeding,  some  commenters  had  argued  that  Local  Exchange  Carrier  (LEC)  use  of  the  411  number  should  be  restricted  to  the  provision  of  traditional  directory 
 services,  meaning  operator  provision  of  local  telephone  numbers.  89  The  Commission  declined  to  do  so  at  that  time,  and  instead  concluded  that  a  LEC  could  offer  enhanced  services  using  a  411  code,  or  any  other 
 N11  code,  only  if  that  LEC  offered  access  to  the  code  on  a  reasonable,  nondiscriminatory  basis  to  competing  enhanced  services  providers.  90  In  January  2002,  the  Commission  released  a  Notice  of 
 Proposed  Rulemaking  in  a  related  proceeding  specifically  asking  whether  allowing  enhanced  directory  assistance  to  be  available  through  presubscribed  411  would  be  consistent  with  Commission  rules 
 regarding  pay-  per-  call  and  related  services.  91  We  seek  comment  on  the  narrow  question  of  how  to  further  define  directory  services  that  are  specifically  exempt  from  the  consumer  protections  of  pay-  per-  call, 
 regardless  of  whether  any  presubscription  or  comparable  agreement  exists. 
 b.  Data  Services 
 35.  At  least  two  commenters  in  2003  claimed  that  data  services  are  exempt  from  regulation  under  section  228  and  another  has  suggested  that  uncertainty  in  this  area  might  fluster  development  of 


 nascent  industries.  92  However,  section  228  has  several  provisions  that  allude  to  data  services  being  pay-per-  call  services.  First,  section  228(  f)(  3)  required  the  Commission  to  review  the  extension  of  regulation 
 under  [section  228]  with  respect  to  persons  that  provide,  for  a  per-  call  charge,  data  services  that  are  not  pay-  per-  call  services.  93  In  the  First  TDDRA  Order,  the  Commission  noted  that  the  statutory  definition  of 
 pay-  per-  call  includes  data  information  services,  but  it  did  not  find  a  need  to  warrant  extension  of  regulation  of  section  228  outside  pay-  per-  call  data  services.  94  In  addition,  section  228(  c)(  8)  provides  an 
 exception  to  the  criteria  for  written  agreements  for  any  purchase  of  goods  or  of  services  that  are  not  information  services.  95  We  seek  comment  on  whether  further  clarification  is  needed  on  this  topic  of 
 what  data  services  fit  within  the  pay-  per-  call  definition.  We  seek  specific  comments  on  items  that  might  be  of  significant  concern  for  consumers  and  for  developing  businesses,  including  small  businesses. 


 IV.  MEMORANDUM  OPINION  AND  ORDER  IN  CC  DOCKET  NO.  96-  146 
 A.  WKP  Application  for  Review 
 36.  In  1995,  WKP  Communications,  Inc.  (WKP)  filed  an  application  for  review  of  a  staff 


 89  The  Use  of  N11  Code  and  Other  Abbreviated  Dialing  Arrangements,  CC  Docket  No.  92-  105,  First  Report  and 
 Order  and  Further  Notice  of  Proposed  Rulemaking,  12  FCC  Rcd  5572,  5600,  para.  48  (N11  First  Report  and  Order).  90 
 N11  First  Report  and  Order,  12  FCC  Rcd  at  5601,  para.  48.  91 
 Provision  of  Directory  Listing  Information  Under  the  Communications  Act  of  1934,  as  Amended,  CC  Docket  No.  99-  273;  The  Use  of  N11  Codes  and  Other  Abbreviated  Dialing  Arrangements,  CC  Docket  No.  92-  105; 


 Administration  of  the  North  American  Numbering  Plan,  CC  Docket  No.  92-  237,  Notice  of  Proposed  Rulemaking,  17  FCC  Rcd  1164,  1183,  para.  37  (FCC  01-  384)  (N11  NPRM). 
 92  See  AWS  2003  Comment  at  6  n.  12;  Pilgrim  Telephone,  Inc.  Reply  Comment  at  21  (contending  that  wireless  data-based 
 information  services  are  not  subject  to  section  228);  see  also  Ex  Parte  filing,  Mobile  Entertainment  Forum  (questioning  whether  section  228  applies). 


 93  47  U.  S.  C.    228(  f)(  3). 
 94  See  First  TDDRA  Order  8  FCC  Rcd  at  6892  and  6903,  paras.  41,  99-  100. 
 95  47  U.  S.  C.    228(  c)(  8)(  D). 
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 interpretation  given  in  the  Marlowe  Letter.  96  The  letter  gave  an  opinion  of  how,  among  other  things,  section  201(  b)  and  228  would  apply  to  several  hypothetical  scenarios  where  international  long  distance 
 service  providers  would  be  used  to  transmit  information  and  entertainment  services.  97  The  scenarios  described  involved  the  transmission  of  calls  by  an  authorized  carrier  at  a  tariffed  rate  through  10XXX 
 dialing  sequence,  a  500  number,  and  a  700  number.  Both  the  Marlowe  Letter  and  WKPs  Application  for  Review  were  drafted  before  the  1996  Act  had  gone  into  effect,  and  there  was  still  an  exemption  for 
 tariffed  services  under  section  228.  98  In  addition  to  Congress  removal  of  the  tariffed  exemption,  the  Commission  has  spoken  twice  on  the  issue  of  revenue  sharing  in  general,  first  in  the  1996  Order  & 
 NPRM  and  more  recently  in  the  chat-  line  orders  discussed  above.  99  Since  filing  its  initial  Application  for  Review,  WKP  has  done  nothing  to  update  its  Application  for  Review.  Further,  WKP  has  apparently 
 ceased  acting  as  a  common  carrier  and  Commission  staff  has  been  unsuccessful  in  reaching  WKP  to  determine  whether  it  wanted  to  pursue  the  Application  for  Review.  100  The  Commission,  therefore, 
 dismisses  this  application  as  moot.  We  note  that  some  of  the  general  topics  raised  in  the  application  for  review,  which  went  well  beyond  the  scope  of  the  letter,  are  raised  in  this  NPRM.  101 


 B.  Florida  Public  Service  Petition  for  Rulemaking 
 37.  In  1995,  the  Florida  Public  Service  Commission  (FPSC)  filed  a  Petition  for  Rulemaking  with  the  Commission  proposing,  among  other  things,  the  establishment  of  a  service  to  allow  subscribers 


 to  have  bill  blocking,  which  would  not  be  dependant  upon  the  use  of  900  numbers.  102  In  January  2004,  the  FPSC  filed  a  notice  withdrawing  their  petition.  103  Therefore,  we  dismiss  the  Petition  for  Rulemaking. 


 C.  Closing  CC  Docket  96-  146 
 38.  Since  the  Commission  released  the  1996  Order  &  NPRM  in  CC  Docket  No.  96-  146,  the  audiotext  information  services  market,  as  well  as  related  regulatory  environment  and  technology  have 


 undergone  significant  changes.  As  noted  earlier,  the  number  of  assigned  900  numbers,  dropped  from  a  peak  of  447  in  1999  to  206  by  the  end  of  2002  and  many  are  no  longer  used  by  end  users.  104  As  noted 


 96  Direct  Dialed  Calls  to  International  Information  Services,  File  No.  ENF  95-  20  (October  5,  1995)  (WKP 
 Application  for  Review).  See  also  WKP  Communications  Files  Application  for  Review  of  Common  Carrier  Bureau  Staff  Ruling  Regarding  Provisions  of  Interstate  Information  Services  at  Tariffed  Rates,  10  FCC  Rcd  11518  (rel. 


 October  24,  1995).  97 
 Marlowe  Letter,  10  FCC  Rcd  10945.  98 
 The  exemption  for  tariffed  services  was  removed  by  the  1996  Act.  99 
 See  supra,  paras.  29-  32.  100 
 Since  1998,  all  common  carriers  have  been  required  to  file  499A  forms,  but  there  is  no  record  of  WKP  having  done  so.  The  law  firm  that  filed  the  petition  on  behalf  of  WKP  provided  Commission  staff  with  the  last  known 


 address  of  WKP,  and  a  letter  sent  to  that  address  in  September  2003  was  returned  as  undeliverable.  101 
 See  supra,  paras.  29-  32.  102 
 Policies  and  Rules  Implementing  the  Telephone  Disclosure  and  Dispute  Resolution  Act,  Florida  Public  Service  Commission  Petition  to  Initiate  Rulemaking  to  Adopt  Additional  Safeguards,  RM-  8783,  filed  December  8,  1995 


 (FPSC  Petition).  See  also  Office  of  Public  Affairs,  Reference  Operations  Division,  Petitions  for  Rulemaking  File,  Report  No.  2127,  Public  Notice,  April  1,  1996;  Florida  Public  Service  Commission  1996  Reply,  RM-  8783;  and 
 Florida  Public  Service  Commission  1996  Comment.  103 
 Policies  and  Rules  Implementing  the  Telephone  Disclosure  and  Dispute  Resolution  Act,  Florida  Public  Service  Commission  Notice  of  Withdrawal  of  Petition  to  Initiate  Rulemaking,  filed  January  26,  2004. 


 104  See  supra,  paras.  19-  22. 
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 above,  many  carriers  decline  to  provide  transport  or  bill  for  900  numbers.  105  Consumers  complain  about  different  problems,  as  discussed  above.  106  Regulatory  changes  included  detariffing,  107  slamming 
 verification,  108  and  adjudication  of  formal  complaints  by  the  FCC  109  and  outside  agencies.  110  Instant  credit  and  electronic  transactions  are  now  common  in  e-  commerce  transactions. 


 39.  As  the  comment  cycle  for  the  1996  Order  &  NPRM  was  completed  before  the  rules  actually  took  effect,  the  comments  from  1996  provided  no  evidence  of  the  impact  of  those  rules.  CGBs 
 effort  to  refresh  the  record  in  this  docket  in  2003  was  not  met  with  extensive  comment,  nor  a  full  range  of  views.  Only  15  parties,  most  in  the  pay-  per-  call  industry,  submitted  comments,  replies,  or  ex  parte 
 filings,  contrasting  to  the  more  varied  38  parties  that  had  filed  comments  in  response  to  the  1996  Order  &  NPRM.  Several  of  the  parties  argued  that  the  record  was  too  stale  to  reflect  accurately  the  current  market 
 and  regulatory  environment.  111 
 40.  It  is  clear  that  the  subject  of  this  proceeding  has  changed  significantly  from  when  the  1996  Order  &  NPRM  was  released  and  when  most  comments  were  filed.  While  there  are  items  in  the 


 comments  and  proposals  that  are  still  relevant,  it  would  be  impossible  without  further  comment  and  review  to  ascertain  which  material  is  dated  and  which  material  is  still  viable.  In  the  interest  of 
 administrative  efficiency,  therefore,  we  now  close  and  terminate  CC  Docket  No.  96-  146.  To  the  extent  that  parties  believe  portions  of  their  1996  comments  are  still  relevant,  parties  should  resubmit  the  relevant 
 parts  of  such  comments,  if  any,  in  this  new  docket.  Parties  refiling  portions  of  comments  are  asked  to  do 


 105  See  supra,  para.  20  note  57. 
 106  See,  e.  g.,  supra  para.  17  note  49. 
 107  The  Commission  mandatorily  detariffed  interstate,  domestic,  interexchange  services,  including  900  transport 
 service,  provided  by  nondominant  interexchange  carriers.  See  Policy  and  Rules  Concerning  the  Interstate,  Interexchange  Marketplace,  Implementation  of  Section  254(  g)  of  the  Communications  Act  of  1934,  Second  Report 


 and  Order,  11  FCC  Rcd  20730  (1996),  recon.,  12  FCC  Rcd  15014  (1997),  stay  granted,  MCI  Telecommunications  Corp.  v.  FCC,  No.  96-  1459  (D.  C.  Cir.  Feb.  13,  1997);  Order  on  Reconsideration,  12  FCC  Rcd  15014  (1997);  Second 
 Order  on  Reconsideration  and  Erratum,  14  FCC  Rcd  6004  (1999);  stay  lifted  and  affd,  MCI  WorldCom  v.  FCC,  209  F.  3d  760  (D.  C.  Cir.  April  28,  2000),  Memorandum  Report  and  Order,  15  FCC  Rcd  22321  (Com.  Car.  Bur. 
 2000);  Common  Carrier  Bureau  Extends  Transition  Period  for  Detariffing  Consumer  Domestic  Long  Distance  Services,  Public  Notice,  16  FCC  Rcd  2906  (Com.  Car.  Bur.  2001). 
 108  See  generally  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. 


 109  See,  e.  g.,  Beehive  v.  AT&  T,  17  FCC  Rcd  11641  (2002)  (complainant  failed  to  show  revenue-  sharing  arrangement 
 between  carrier  and  information  provider  was  unreasonable  under  section  201(  b))  (section  228  claims  not  reached);  AT&  T  Corp.  v.  Frontier  Communications  of  Mt.  Pulaski,  Inc.,  17  FCC  Rcd  4041  (2002)  (follows  Jefferson)  ;  AT&  T 


 v.  Atlas  Telephone  Co.  and  Total  Telecommunications  Services,  Inc.,  16  FCC  Rcd  5726  (2001),  affd  in  part  and  remanded  sub  nom,  AT&  T  Corp.  v.  F.  C.  C.,  317  F.  3d  227  (D.  C.  Cir.  2003)(  unjust  and  unreasonable  under  section 
 201(  b)  but  TDDRA  claims  dismissed),  dismissed,  Atlas  Telephone  Co.  v.  AT&  T  Corp.,  File  No.  E-  97-  03,  Order,  18  FCC  Rcd  11533. 
 110  For  example,  the  FTC  charged  defendants  with  violating  TDDRA  requirements  by  luring  kids  and  other 
 consumers  to  collect  a  prize  and  then  rerouting  their  modem  connections  through  a  900-  number  to  charge  them  high  per-  minute  phone  rates.  See    Youve  Just  Won  a  Playstation  2!      or  Maybe  Not,  Says  FTC  in  Complaint  Filed 


 Against  Internet  Spammers,  (rel.  April  24,  2002),  <http://  www.  ftc.  gov/  opa/  2002/  04/  btv.  htm>.  States  have  also  been  active  in  this  area. 
 111  See,  e.  g.,  Letter  from  Z-  Tel  Communications  at  1,  Pilgrim  Telephone,  Inc.  2003  Comment  at  20. 
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 so  with  particularity.  112  Comments  filed  in  2003  in  response  to  the  Notice  need  not  be  filed  again,  as  they  will  be  included  in  this  new  rulemaking. 
 D.  Correction  of  Word  Error 
 41.  The  rules  as  adopted  in  1996  contain  a  minor  error  in  wording  which  is  being  corrected  by  this  Order.  In  section  64.154(  c)(  2)(  vi),  the  word  up  was  omitted.  We  correct  this  sentence  to  read: 


 Clearly  states  that  the  caller  can  hang  up  at  or  before  the  end  of  the  introductory  message  without  incurring  any  charge  whatsoever. 


 V.  PROCEDURAL  ISSUES 
 A.  Ex  Parte  Presentations 
 42.  This  is  a  non-  restricted  notice  and  comment  rulemaking  proceeding.  Ex  parte  presentations  are  permitted,  except  during  the  Sunshine  Agenda  period,  provided  they  are  disclosed  as 


 provided  in  the  Commission's  rules. 
 B.  Paperwork  Reduction  Act 
 43.  This  NPRM  contain  proposed  and/  or  modified  information  collection(  s)  subject  to  the  Paperwork  Reduction  Act  of  1995  (PRA).  These  proposed  and/  or  modified  information  collection(  s)  will 


 be  submitted  to  the  Office  of  Management  and  Budget  (OMB)  for  review  under  section  3507  of  the  PRA.  OMB,  the  general  public,  and  other  Federal  agencies  are  invited  to  comment  on  the  proposed  information 
 collection(  s)  contained  in  this  proceeding. 
 C.  Initial  Regulatory  Flexibility  Analysis 
 44.  The  Commissions  Initial  Regulatory  Flexibility  Analysis  in  this  NPRM  is  attached  as  Appendix  B. 


 D.  Filing  Instructions 
 45.  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  30  days  after  publication  in  the  Federal  Register,  and  reply  comments  on  or  before  45  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). 


 46.  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  <your  e-  mail  address>.  A  sample  form  and  directions  will  be  sent  in  reply. 


 112  Parties  should  only  refile  the  particular  pages  from  their  comments  that  they  believe  to  still  be  relevant. 
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 47.  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  electronic  media,  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). 


 48.  The  Commission's  mail  contractor,  Natek,  Inc.,  will  receive  hand-  delivered  or  messenger-  delivered  paper  filings  or  electronic  media  for  the  Commissions  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  and  electronic  media  sent  by  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,  S.  W.,  Washington,  D.  C.  20554.  All  filings  must  be 
 addressed  to  the  Commission's  Secretary,  Office  of  the  Secretary,  Federal  Communications  Commission.  Parties  who  choose  to  file  paper  comments  also  should  send  four  paper  copies  of  their  filings  to  Kelli 
 Farmer,  Federal  Communications  Commission,  Room  4-  C734,  445  12  th  Street,  S.  W.,  Washington,  D.  C.  20554 


 49.  If  a  party  chooses  to  file  by  paper,  one  copy  of  each  filing  must  be  sent  to  the  Commission's  copy  contractor,  Best  Copy  and  Printing,  Inc.  (BCPI),  by  mail  at  Portals  II,  445  12  th  Street, 
 S.  W.,  Room  CY-  B402,  Washington,  D.  C.  20554;  by  e-  mail  at  FCC@  bcpiweb.  com;  by  facsimile  at  (202)  488-  5563;  or  by  telephone  at  (202)  488-  5300. 


 E.  Materials  in  Accessible  Formats 
 50.  To  request  materials  in  accessible  formats  for  people  with  disabilities  (Braille,  large  print,  electronic  files,  audio  format),  send  an  e-  mail  to  fcc504@  fcc.  gov  or  call  the  Consumer  &  Governmental 


 Affairs  Bureau  at  (202)  418-  0530  (voice)  or  (202)  418-  0432  (TTY).  This  NPRM  can  also  be  downloaded  in  Word  and  Portable  Document  Format  (PDF)  at  http://  www.  fcc.  gov/  cgb/  policy/  paypercall.  html. 


 VI.  ORDERING  CLAUSES 
 51.  Accordingly,  IT  IS  ORDERED  that,  pursuant  to  the  authority  contained  in  sections  1-  4,  201(  b),  228  and  303(  r)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151-  154,  201(  b), 


 228  and  303(  r);  and  47  C.  F.  R.    64.  1501-  1515  of  the  Commissions  rules,  this  Notice  of  Proposed  Rulemaking,  and  Memorandum  Opinion  and  Order  is  ADOPTED. 


 52.  IT  IS  FURTHER  ORDERED  that  the  proceedings  in  CC  Docket  No.  96-  146  ARE  TERMINATED,  and  the  docket  is  closed. 
 53.  IT  IS  FURTHER  ORDERED  that  the  Petition  for  Rulemaking  filed  by  the  Florida  Public  Service  Commission  on  December  8,  1995;  and  the  Application  for  Review  filed  by  WKP 
 Communications,  Inc.,  on  October  5,  1995,  are  DISMISSED. 
 54.  IT  IS  FURTHER  ORDERED  that  47  C.  F.  R.    64.  1504(  c)  is  amended  as  set  forth  in  Appendix  A. 


 55.  IT  IS  FUTHER  ORDERED  that  the  Commission's  Consumer  &  Governmental  Affairs  Bureau,  Reference  Information  Center,  SHALL  SEND  a  copy  of  this  Notice  of  Proposed  Rulemaking, 
 and  Memorandum  Opinion  and  Order,  including  the  Initial  Regulatory  Flexibility  Analysis,  to  the  Chief 
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 Counsel  for  Advocacy  of  the  Small  Business  Administration. 
 FEDERAL  COMMUNICATIONS  COMMISSION 


 Marlene  H.  Dortch  Secretary 
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 APPENDIX  A 
 FINAL  RULE 


 For  the  reasons  discussed  in  the  preamble,  Part  64  of  Title  47  of  the  Code  of  Federal  Regulations  is  amended  as  follows: 


 Part  64    MISCELLANEOUS  RULES  RELATING  TO  COMMON  CARRIERS 
 1.  The  authority  citation  for  part  64  continues  to  read  as  follows: 
 Authority:  Sec.  4,  48  Stat.  1066,  as  amended;  47  U.  S.  C.  154,  unless  otherwise  noted.  Interpret  or  apply  secs.  201,  218,  226,  228,  48  Stat  1070,  as  amended,  1077;  47  U.  S.  C.  201,  218,  226,  228 
 unless  otherwise  noted. 
 2.  Section  64.1504  paragraph  (c)(  2)(  vi)  is  amended  to  read  as  follows: 


 (vi)  Clearly  states  that  the  caller  can  hang  up  at  or  before  the  end  of  the  introductory  message  without  incurring  any  charge  whatsoever. 
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 APPENDIX  B 
 Initial  Regulatory  Flexibility  Analysis 


 1.  As  required  by  the  Regulatory  Flexibility  Act  of  1980,  as  amended  (RFA),  1  the  Commission  has  prepared  this  present  Initial  Regulatory  Flexibility  Analysis  (IRFA)  of  the  possible  significant 
 economic  impact  on  a  substantial  number  of  small  entities  by  the  policies  and  rules  proposed  in  this  Notice  of  Proposed  Rulemaking  and  Memorandum  Opinion  and  Order  (NPRM).  Written  public 
 comments  are  requested  on  this  IRFA.  Comments  must  be  identified  as  responses  to  the  IRFA  and  must  be  filed  by  the  deadline  for  comments  on  the  NPRM  provided  above  in  the  Comment  Filing  Procedures 
 section  paragraph  45.  The  Commission  will  send  a  copy  of  the  NPRM,  including  this  IRFA,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business  Administration  (SBA).  2  In  addition,  the  NPRM  and  IRFA 
 (or  summaries  thereof)  will  be  published  in  the  Federal  Register.  3 
 A.  Need  for,  and  Objectives  of,  the  Proposed  Rules 
 2.  The  Commission  has  rules  to  afford  consumers  protection  from  deceptive  practices  associated  with  the  provision  of  audiotext  information  services,  and  the  use  of  toll-  free  numbers.  In  1996, 


 the  Commission  issued  a  Notice  of  Proposed  Rule  Making  proposing  rules  which  were  intended  to  address  potential  circumvention  of  the  regulations.  4  Later,  in  March  of  2003,  the  Commission  issued  a 
 Public  Notice  seeking  to  refresh  the  record  in  the  proceeding.  5  In  this  NPRM,  the  Commission  initiates  a  new  proceeding  to  review  the  effectiveness  of  our  rules  governing  pay-  per-  call  services,  related  audiotext 
 information  services,  and  toll-  free  numbers.  The  Commission  seeks  comment  on  the  state  of  the  900-  number  regime  regulating  pay-  per-  call  services,  the  effectiveness  of  consumer  protections  relating  to  toll-free 
 numbers,  and  to  those  audiotext  information  services  accessed  through  dialing  methods  other  than  900  numbers.  We  are  interested  in  learning  the  extent  to  which  consumer  protections  have  been 
 circumvented,  and  what  steps  we  might  take  to  protect  consumers,  including  small  business  consumers,  from  such  practices.  In  addition,  we  seek  comment  on  changes  in  technology  that  warrant  re-  examination 
 and  clarification  of  these  rules. 
 B.  Legal  Basis 
 3.  The  legal  basis  for  any  action  that  may  be  taken  pursuant  to  this  NPRM  is  contained  in  sections  1-  4,  201(  b),  228,  and  303(  r)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151- 


 154,  201(  b),  228,  and  303(  r). 
 C.  Description  and  Estimate  of  the  Number  of  Small  Entities  to  Which  the  Proposed 


 1  See  5  U.  S.  C.    603.  The  RFA,  see  5  U.  S.  C.    601    612,  has  been  amended  by  the  Small  Business  Regulatory 
 Enforcement  Fairness  Act  of  1996  (SBREFA),  Pub.  L.  No.  104-  121,  Title  II,  110  Stat.  857  (1996).  2 
 See  5  U.  S.  C.    603(  a).  3 
 See  5  U.  S.  C.    603(  a).  4 
 Policies  and  Rules  Governing  Interstate  Pay-  Per-  Call  and  Other  Information  Services  Pursuant  to  the  Telecommunications  Act  of  1996,  CC  Docket  No.  96-  146;  Policies  and  Rules  Implementing  the  Telephone 


 Disclosure  and  Dispute  Resolution  Act,  CC  Docket  No.  93-  22,  Order  and  Notice  of  Proposed  Rule  Making,  11  FCC  Rcd  14738  (1996). 
 5  The  Consumer  &  Governmental  Affairs  Bureau  Seeks  Comment  to  Refresh  the  Record  on  the  Commissions  Rules 
 Governing  Interstate  Pay-  Per-  Call  &  Other  Information  Services,  CC  Docket  No.  96-  146,  Public  Notice,  DA  No.  03-  807  (rel.  March  17,  2003)  (2003  Notice). 
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 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  and  policies,  if  adopted.  6  The 


 RFA  generally  defines  the  term  small  entity  as  having  the  same  meaning  as  the  terms  small  business,  small  organization,  and  small  governmental  jurisdiction.  7  In  addition,  the  term  small  business  has 
 the  same  meaning  as  the  term  small  business  concern  under  the  Small  Business  Act.  8  A  small  business  concern  is  one  which:  (1)  is  independently  owned  and  operated;  (2)  is  not  dominant  in  its  field 
 of  operation;  and  (3)  satisfies  any  additional  criteria  established  by  the  SBA.  9 
 5.  Small  entities  potentially  affected  by  the  policies  and  rules  proposed  herein  include  organizations,  governmental  jurisdictions,  providers  of  audiotext  information  services,  and  providers  of 


 telecommunications  and  other  services,  including  both  wired  and  wireless  services,  such  as  operator  service  providers,  prepaid  calling  card  providers,  and  other  toll  carriers. 


 6.  Small  Businesses.  Nationwide,  there  are  approximately  22.4  million  small  businesses,  according  to  SBA  data.  10 
 7.  Small  Organizations.  A  small  organization  is  generally  any  not-  for-  profit  enterprise  which  is  independently  owned  and  operated  and  is  not  dominant  in  its  field.  11  Nationwide,  there  are 
 approximately  1.6  million  small  organizations.  12 
 8.  Small  Governmental  Jurisdictions.  The  term  small  governmental  jurisdiction  is  defined  as  governments  of  cities,  counties,  towns,  townships,  villages,  school  districts,  or  special 


 districts,  with  a  population  of  less  than  fifty  thousand.  13  As  of  1997,  there  were  approximately  87,453  government  jurisdictions  in  the  United  States.  14  This  number  includes  39,044  county  governments, 
 municipalities,  and  townships,  of  which  37,546  have  populations  of  fewer  than  50,000  and  1,498  have  populations  of  50,000  or  more.  Thus,  we  estimate  the  number  of  small  governmental  jurisdictions  overall 
 to  be  up  to  85,  955. 
 1.  Providers  of  audiotext  information  services 
 9.  While  the  Commissions  rules  directly  apply  to  common  carriers  that  transmit  and  bill 


 6  5  U.  S.  C.    603(  b)(  3). 
 7  5  U.  S.  C.    601(  6). 
 8  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  definition(  s)  in  the  Federal  Register. 
 9  15  U.  S.  C.    632. 
 10  See  SBA,  Programs  and  Services,  SBA  Pamphlet  No.  CO-  0028,  at  page  40  (July  2002). 
 11  5  U.  S.  C.    601(  4). 
 12  Independent  Sector,  The  New  Nonprofit  Almanac  &  Desk  Reference  (2002). 
 13  5  U.  S.  C.    601(  5). 
 14  U.  S.  Census  Bureau,  Statistical  Abstract  of  the  United  States:  2000,  Section  9,  pages  299-  300,  Tables  490  and 
 492. 
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 subscribers  for  information  services,  other  companies  actually  providing  the  information  services  might  be  indirectly  affected.  For  example,  audiotext  information  service  providers  that  have  used  toll-  free 
 numbers  to  provide  information  services  will  be  affected  by  the  proposed  limitations  involving  the  use  of  toll-  free  numbers  and  mandatory  written  presubscription.  These  companies  may  experience  an  adverse 
 economic  impact  in  that  they  will  have  to  change  the  manner  in  which  they  provide  services  to  secure  billing. 


 10.  The  Commission  has  only  limited  unverifiable  information  to  predict  either  the  total  number  of  audiotext  information  service  providers,  or  the  percentage  of  providers  that  qualify  as  small 
 entities.  Audiotext  Information  Service  providers  are  not  subject  to  federal  licensing  or  reporting  requirements.  In  1996,  staff  had  been  able  to  obtain  from  industry  sources  only  an  informal  estimate  that 
 the  total  number  of  these  entities  operating,  which  at  that  time  was  noted  as  probably  somewhere  between  10,000  and  20,000  total  operating  entities.  15  Although  the  Commission  asked  for  comment  as  to  the 
 number  of  small  businesses  that  would  have  been  affected  by  regulations  proposed  in  this  area  in  1996,  the  Commission  received  no  data  in  comments.  Even  assuming  that  this  rough  estimate  is  correct,  we 
 cannot,  with  certainty  identity  what  portion  of  such  providers  might  be  providing  services  in  a  manner  that  would  subject  them  to  the  proposed  regulations  governing  toll-  free  numbers  and  presubscription 
 agreements,  or  predict  what  portion  of  all  such  providers  are  small  businesses.  We  invite  parties  commenting  on  this  IRFA  to  provide  information  as  to  the  number  of  small  businesses  that  would  be 
 affected  by  our  proposed  regulations  and  to  identify  alternatives  that  would  reduce  the  burden  on  these  entities  while  still  ensuring  that  consumers  are  protected  adequately. 


 11.  All  Other  Information  Services.  This  industry  comprises  establishments  primarily  engaged  in  providing  other  information  services  (except  new  syndicates  and  libraries  and  archives).  16 
 We  note  that,  in  our  Notice,  we  have  described  activities  such  as  email,  online  gaming,  web  browsing,  video  conferencing,  instant  messaging,  and  other,  similar  Internet  Protocol-  enabled  services.  The  SBA 
 has  developed  a  small  business  size  standard  for  this  category;  that  size  standard  is  $6  million  or  less  in  average  annual  receipts.  17  According  to  United  States  Bureau  of  the  Census  (the  Census  Bureau)  data  for 
 1997,  there  were  195  firms  in  this  category  that  operated  for  the  entire  year.  18  Of  these,  172  had  annual  receipts  of  under  $5  million,  and  an  additional  nine  firms  had  receipts  of  between  $5  million  and 
 $9,999,999.  Consequently,  we  estimate  that  the  majority  of  these  firms  are  small  entities  that  may  be  affected  by  our  action. 


 2.  Providers  of  Telecommunications  and  Other  Services 
 12.  We  have  included  small  incumbent  local  exchange  carriers  (LECs)  in  this  present  RFA  analysis.  As  noted  above,  a  small  business  under  the  RFA  is  one  that,  inter  alia,  meets  the  pertinent 


 small  business  size  standard  (e.  g.,  a  telephone  communications  business  having  1,500  or  fewer  employees),  and  is  not  dominant  in  its  field  of  operation.  19  The  SBAs  Office  of  Advocacy  contends 


 15  1996  Order  &  NPRM,  11  FCC  Rcd  at  14758,  para.  57. 
 16  U.  S.  Census  Bureau,  2002  NAICS  Definitions:  519190  All  Other  Information  Services  (online,  February  2004, 
 at  www.  census.  gov).  17 
 13  C.  F.  R.    121.201,  NAICS  code  519190  (changed  from  514199  in  October  2002).  18 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  "Establishment  and  Firm  Size  (Including  Legal  Form  of  Organization),"  Table  4,  NAICS  code  514199  (issued  October  2000).  This  category  was 


 created  for  the  2002  Economic  Census  by  taking  a  portion  of  the  superseded  1997  category,  All  Other  Information  Services,  NAICS  code  514199.  The  data  cited  in  the  text  above  are  derived  from  the  superseded  category. 
 19  15  U.  S.  C.    632. 
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 that,  for  RFA  purposes,  small  incumbent  LECs  are  not  dominant  in  their  field  of  operation  because  any  such  dominance  is  not  national  in  scope.  20  We  have  therefore  included  small  incumbent  LECs  in  this 
 RFA  analysis,  although  we  emphasize  that  this  RFA  action  has  no  effect  on  Commission  analyses  and  determinations  in  other,  non-  RFA  contexts. 


 13.  Total  Number  of  Telephone  Companies  Affected.  The  Census  Bureau  reports  that,  at  the  end  of  1997,  there  were  6,239  firms  engaged  in  providing  telephone  services,  as  defined  therein.  21 
 This  number  contains  a  variety  of  different  categories  of  carriers,  including  local  exchange  carriers,  interexchange  carriers,  competitive  access  providers,  mobile  service  carriers,  operator  service  providers, 
 pay  telephone  operators,  personal  communications  service  (PCS)  providers,  covered  small  mobile  radio  (SMR)  providers,  and  resellers.  It  seems  certain  that  some  of  those  6,239  telephone  service  firms  may  not 
 qualify  as  small  entities  because  they  are  not  independently  owned  and  operated.  22  For  example,  a  PCS  provider  that  is  affiliated  with  an  interexchange  carrier  having  more  than  1,500  employees  would  not 
 meet  the  definition  of  a  small  business.  It  seems  reasonable  to  conclude,  therefore,  that  6,239  or  fewer  telephone  service  firms  are  small  entity  telephone  service  firms  that  may  be  affected  by  the  policies  and 
 rules  proposed  in  this  NPRM. 
 14.  Wired  Telecommunications  Carriers.  The  SBA  has  developed  a  small  business  size  standard  for  Wired  Telecommunications  Carriers,  which  consists  of  all  such  companies  having  1,500  or 


 fewer  employees.  23  According  to  Census  Bureau  data  for  1997,  there  were  2,225  firms  in  this  category,  total,  that  operated  for  the  entire  year.  24  Of  this  total,  2,201  firms  had  employment  of  999  or  fewer 
 employees,  and  an  additional  24  firms  had  employment  of  1,000  employees  or  more.  25  Thus,  under  this  size  standard,  the  great  majority  of  firms  can  be  considered  small. 


 15.  Incumbent  LECs.  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  incumbent  LECs.  The  appropriate  size  standard  under  SBA  rules  is  for  the 
 category  Wired  Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  26  According  to  Commission  data,  27  1,337  carriers  have  reported  that  they  are 
 engaged  in  the  provision  of  incumbent  local  exchange  services.  Of  these  1,337  carriers,  an  estimated 


 20  Letter  from  Jere  W.  Glover,  Chief  Counsel  for  Advocacy,  SBA,  to  William  E.  Kennard,  Chairman,  FCC  (May 
 27,  1999).  The  Small  Business  Act  contains  a  definition  of  small-  business  concern,  which  the  RFA  incorporates  into  its  own  definition  of  small  business.  See  15  U.  S.  C.    632(  a)  (Small  Business  Act);  5  U.  S.  C.    601(  3)  (RFA). 


 SBA  regulations  interpret  small  business  concern  to  include  the  concept  of  dominance  on  a  national  basis.  See  13  C.  F.  R.    121.102(  b). 
 21  1997  Economic  Census,  Establishment  and  Firm  Size,  U.  S.  Census  Bureau,  U.  S.  Department  of  Commerce, 
 Economics  and  Statistics  Administration,  Document  EC97S51S-  SZ  (1997  Economic  Census),  at  67.  22 
 15  U.  S.  C.    632(  a)(  1).  23 
 13  C.  F.  R.    121.201,  NAICS  code  513310  (changed  to  517110  in  October  2002).  24 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms  Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513310  (issued  October  2000). 


 25  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms 
 Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513310  (issued  October  2000).  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of  1,500  or  fewer  employees;  the  largest 


 category  provided  is  Firms  with  1,000  employees  or  more.  26 
 13  C.  F.  R.    121.201,  NAICS  code  517110  (changed  from  513310  in  October  2002).  27 
 FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service  at  Table  5.3,  page  5-  5  (August  2003).  This  source  uses  data  that  are  current  as  of  December  31,  2001. 
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 1,032  have  1,500  or  fewer  employees  and  305  have  more  than  1,500  employees.  Consequently,  the  Commission  estimates  that  most  providers  of  incumbent  local  exchange  service  are  small  businesses  that 
 may  be  affected  by  our  proposed  policies  and  actions. 
 16.  Competitive  LECs,  Competitive  Access  Providers  (CAPs),  and  Other  Local  Service  Providers.  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard 


 specifically  for  these  service  providers.  The  appropriate  size  standard  under  SBA  rules  is  for  the  category  Wired  Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or 
 fewer  employees.  28  According  to  Commission  data,  29  609  carriers  have  reported  that  they  are  engaged  in  the  provision  of  either  competitive  access  provider  services  or  competitive  local  exchange  carrier 
 services.  Of  these  609  carriers,  an  estimated  458  have  1,500  or  fewer  employees  and  151  have  more  than  1,500  employees.  In  addition,  35  carriers  have  reported  that  they  are  Other  Local  Service  Providers. 
 Of  the  35,  an  estimated  34  have  1,500  or  fewer  employees  and  one  has  more  than  1,500  employees.  Consequently,  the  Commission  estimates  that  most  providers  of  competitive  local  exchange  service, 
 competitive  access  providers,  and  Other  Local  Service  Providers  are  small  entities  that  may  be  affected  by  our  proposed  policies  and  actions. 


 17.  Local  Resellers.  The  SBA  has  developed  a  small  business  size  standard  for  the  category  of  Telecommunications  Resellers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or 
 fewer  employees.  30  According  to  Commission  data,  31  133  carriers  have  reported  that  they  are  engaged  in  the  provision  of  local  resale  services.  Of  these,  an  estimated  127  have  1,500  or  fewer  employees  and  six 
 have  more  than  1,500  employees.  Consequently,  the  Commission  estimates  that  the  majority  of  local  resellers  are  small  entities  that  may  be  affected  by  our  proposed  policies  and  actions. 


 18.  Interexchange  Carriers.  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  providers  of  interexchange  services.  The  appropriate  size  standard 
 under  SBA  rules  is  for  the  category  Wired  Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  32  According  to  Commission  data,  33  261  carriers  have 
 reported  that  they  are  engaged  in  the  provision  of  interexchange  service.  Of  these,  an  estimated  223  have  1,500  or  fewer  employees  and  38  have  more  than  1,500  employees.  Consequently,  the  Commission 
 estimates  that  the  majority  of  interexchange  carriers  are  small  entities  that  may  be  affected  by  our  proposed  policies  and  actions. 


 19.  Operator  Service  Provider  (OSP).  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  operator  service  providers.  The  appropriate  size  standard 
 under  SBA  rules  is  for  the  category  Wired  Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  34  According  to  Commission  data,  35  23  carriers  have 


 28  13  C.  F.  R.    121.201,  NAICS  code  517110  (changed  from  513310  in  October  2002). 
 29  FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service 
 at  Table  5.3,  page  5-  5  (August  2003).  This  source  uses  data  that  are  current  as  of  December  31,  2001.  30 
 13  CFR    121.201,  NAICS  code  517310  (changed  from  513330  in  October  2002).  31 
 FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service  at  Table  5.3,  page  5-  5  (August  2003).  This  source  uses  data  that  are  current  as  of  December  31,  2001. 


 32  13  C.  F.  R.    121.201,  NAICS  code  517110  (changed  from  513310  in  October  2002). 
 33  FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service 
 at  Table  5.3,  page  5-  5  (August  2003).  This  source  uses  data  that  are  current  as  of  December  31,  2001.  34 
 13  C.  F.  R.    121.201,  NAICS  code  517110  (changed  from  513310  in  October  2002). 
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 reported  that  they  are  engaged  in  the  provision  of  operator  services.  Of  these,  an  estimated  22  have  1,500  or  fewer  employees  and  one  has  more  than  1,500  employees.  Consequently,  the  Commission  estimates 
 that  the  majority  of  OSPs  are  small  entities  that  may  be  affected  by  our  proposed  policies  and  actions. 
 20.  Prepaid  Calling  Card  Providers.  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  prepaid  calling  card  providers.  The  appropriate  size  standard 


 under  SBA  rules  is  for  the  category  Telecommunications  Resellers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  36  According  to  Commission  data,  37  37  carriers  have 
 reported  that  they  are  engaged  in  the  provision  of  prepaid  calling  cards.  Of  these,  an  estimated  36  have  1,500  or  fewer  employees  and  one  has  more  than  1,500  employees.  Consequently,  the  Commission 
 estimates  that  the  majority  of  prepaid  calling  card  providers  are  small  entities  that  may  be  affected  by  our  proposed  policies  and  actions. 


 21.  Other  Toll  Carriers.  Neither  the  Commission  nor  the  SBA  has  developed  a  size  standard  for  small  businesses  specifically  applicable  to  Other  Toll  Carriers.  This  category  includes  toll  carriers 
 that  do  not  fall  within  the  categories  of  interexchange  carriers,  OSPs,  prepaid  calling  card  providers,  satellite  service  carriers,  or  toll  resellers.  The  closest  applicable  size  standard  under  SBA  rules  is  for 
 Wired  Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  38  According  to  Commissions  data,  42  companies  reported  that  their  primary 
 telecommunications  service  activity  was  the  provision  of  payphone  services.  39  Of  these  42  companies,  an  estimated  37  have  1,500  or  fewer  employees  and  five  have  more  than  1,500  employees.  40  Consequently, 
 the  Commission  estimates  that  most  Other  Toll  Carriers  are  small  entities  that  may  be  affected  by  our  proposed  policies  and  actions. 


 22.  Wireless  Service  Providers.  The  SBA  has  developed  a  small  business  size  standard  for  wireless  firms  within  the  two  broad  economic  census  categories  of  Paging41  and  Cellular  and  Other 
 Wireless  Telecommunications.  42  Under  both  SBA  categories,  a  wireless  business  is  small  if  it  has  1,500  or  fewer  employees.  For  the  census  category  of  Paging,  Census  Bureau  data  for  1997  show  that  there 
 were  1,320  firms  in  this  category,  total,  that  operated  for  the  entire  year.  43  Of  this  total,  1,303  firms  had  employment  of  999  or  fewer  employees,  and  an  additional  17  firms  had  employment  of  1,000  employees 


 (...  continued  from  previous  page) 
 35  FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service 
 at  Table  5.3,  page  5-  5  (August  2003).  This  source  uses  data  that  are  current  as  of  December  31,  2001.  36 
 13  C.  F.  R.    121.201,  NAICS  code  517310  (changed  from  513330  in  October  2002).  37 
 FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service  at  Table  5.3,  page  5-  5  (August  2003).  This  source  uses  data  that  are  current  as  of  December  31,  2001. 


 38  13  C.  F.  R.    121.201,  NAICS  code  513310  (changed  to  517110  in  October  2002). 
 39  FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service 
 at  Table  5.3,  page  5-  5  (August  2003).  This  source  uses  data  that  are  current  as  of  December  31,  2001.  40 
 FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service  at  Table  5.3,  page  5-  5  (August  2003).  This  source  uses  data  that  are  current  as  of  December  31,  2001. 


 41  13  C.  F.  R.    121.201,  NAICS  code  513321  (changed  to  517211  in  October  2002). 
 42  13  C.  F.  R.    121.201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
 43  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms 
 Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513321  (issued  October  2000). 
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 or  more.  44  Thus,  under  this  category  and  associated  small  business  size  standard,  the  great  majority  of  firms  can  be  considered  small.  For  the  census  category  Cellular  and  Other  Wireless  Telecommunications, 
 Census  Bureau  data  for  1997  show  that  there  were  977  firms  in  this  category,  total,  that  operated  for  the  entire  year.  45  Of  this  total,  965  firms  had  employment  of  999  or  fewer  employees,  and  an  additional  12 
 firms  had  employment  of  1,000  employees  or  more.  46  Thus,  under  this  second  category  and  size  standard,  the  great  majority  of  firms  can,  again,  be  considered  small. 


 23.  Narrowband  Personal  Communications  Services.  The  Commission  held  an  auction  for  Narrowband  PCS  licenses  that  commenced  on  July  25,  1994,  and  closed  on  July  29,  1994.  A  second 
 auction  commenced  on  October  26,  1994  and  closed  on  November  8,  1994.  For  purposes  of  the  first  two  Narrowband  PCS  auctions,  small  businesses  were  entities  with  average  gross  revenues  for  the  prior 
 three  calendar  years  of  $40  million  or  less.  47  Through  these  auctions,  the  Commission  awarded  a  total  of  41  licenses,  11  of  which  were  obtained  by  four  small  businesses.  48  To  ensure  meaningful  participation  by 
 small  business  entities  in  future  auctions,  the  Commission  adopted  a  two-  tiered  small  business  size  standard  in  the  Narrowband  PCS  Second  Report  and  Order.  49  A  small  business  is  an  entity  that, 
 together  with  affiliates  and  controlling  interests,  has  average  gross  revenues  for  the  three  preceding  years  of  not  more  than  $40  million.  50  A  very  small  business  is  an  entity  that,  together  with  affiliates  and 
 controlling  interests,  has  average  gross  revenues  for  the  three  preceding  years  of  not  more  than  $15  million.  51  The  SBA  has  approved  these  small  business  size  standards.  52  A  third  auction  commenced  on 


 44  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms 
 Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513321  (issued  October  2000).  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of  1,500  or  fewer  employees;  the  largest 


 category  provided  is  Firms  with  1000  employees  or  more.  45 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms  Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513322  (issued  October  2000). 


 46  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms 
 Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513322  (issued  October  2000).  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of  1,500  or  fewer  employees;  the  largest 


 category  provided  is  Firms  with  1000  employees  or  more.  47 
 Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding  Narrowband  PCS,  Third  Memorandum  Opinion  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  10  FCC  Rcd  175,  196,  para.  46 


 (1994).  48 
 See  Announcing  the  High  Bidders  in  the  Auction  of  ten  Nationwide  Narrowband  PCS  Licenses,  Winning  Bids  Total  $617,006,674,  Public  Notice,  PNWL  94-  004  (released  Aug.  2,  1994);  Announcing  the  High  Bidders  in  the 


 Auction  of  30  Regional  Narrowband  PCS  Licenses;  Winning  Bids  Total  $490,  901,  787,  Public  Notice,  PNWL  94-  27  (released  Nov.  9,  1994). 
 49  Amendment  of  the  Commissions  Rules  to  Establish  New  Personal  Communications  Services,  Narrowband  PCS, 
 Second  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  15  FCC  Rcd  10456,  10476,  para.  40  (2000). 


 50  Amendment  of  the  Commissions  Rules  to  Establish  New  Personal  Communications  Services,  Narrowband  PCS, 
 Second  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  15  FCC  Rcd  10456,  10476,  para.  40  (2000). 


 51  Amendment  of  the  Commissions  Rules  to  Establish  New  Personal  Communications  Services,  Narrowband  PCS, 
 Second  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  15  FCC  Rcd  10456,  10476,  para.  40  (2000). 


 52  See  Letter  to  Amy  Zoslov,  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless  Telecommunications 
 Bureau,  Federal  Communications  Commission,  from  Aida  Alvarez,  Administrator,  Small  Business  Administration,  dated  December  2,  1998. 
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 October  3,  2001  and  closed  on  October  16,  2001.  Here,  five  bidders  won  317  (Metropolitan  Trading  Areas  and  nationwide)  licenses.  53  Three  of  these  claimed  status  as  a  small  or  very  small  entity  and  won 
 311  licenses. 
 24.  Common  Carrier  Paging.  The  SBA  has  developed  a  small  business  size  standard  for  wireless  firms  within  the  broad  economic  census  categories  of  Cellular  and  Other  Wireless 


 Telecommunications.  54  Under  this  SBA  category,  a  wireless  business  is  small  if  it  has  1,500  or  fewer  employees.  For  the  census  category  of  Paging,  Census  Bureau  data  for  1997  show  that  there  were  1,320 
 firms  in  this  category,  total,  that  operated  for  the  entire  year.  55  Of  this  total,  1,303  firms  had  employment  of  999  or  fewer  employees,  and  an  additional  17  firms  had  employment  of  1,000  employees  or  more.  56 
 Thus,  under  this  category  and  associated  small  business  size  standard,  the  great  majority  of  firms  can  be  considered  small. 


 25.  In  the  Paging  Second  Report  and  Order,  the  Commission  adopted  a  size  standard  for  small  businesses  for  purposes  of  determining  their  eligibility  for  special  provisions  such  as  bidding 
 credits  and  installment  payments.  57  A  small  business  is  an  entity  that,  together  with  its  affiliates  and  controlling  principals,  has  average  gross  revenues  not  exceeding  $15  million  for  the  preceding  three 
 years.  58  The  SBA  has  approved  this  definition.  59  An  auction  of  Metropolitan  Economic  Area  (MEA)  licenses  commenced  on  February  24,  2000,  and  closed  on  March  2,  2000.  Of  the  2,499  licenses 
 auctioned,  985  were  sold.  60  Fifty-  seven  companies  claiming  small  business  status  won  440  licenses.  61  An  auction  of  MEA  and  Economic  Area  (EA)  licenses  commenced  on  October  30,  2001,  and  closed  on 
 December  5,  2001.  Of  the  15,514  licenses  auctioned,  5,323  were  sold.  62  One  hundred  thirty-  two  companies  claiming  small  business  status  purchased  3,724  licenses.  A  third  auction,  consisting  of  8,874 
 licenses  in  each  of  175  EAs  and  1,328  licenses  in  all  but  three  of  the  51  MEAs  commenced  on  May  13,  2003,  and  closed  on  May  28,  2003.  Seventy-  seven  bidders  claiming  small  or  very  small  business  status 
 won  2,093  licenses.  63  Currently,  there  are  approximately  74,000  Common  Carrier  Paging  licenses. 


 53  See  Narrowband  PCS  Auction  Closes,  Public  Notice,  16  FCC  Rcd  18663  (WTB  2001). 
 54  13  C.  F.  R.    121.201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
 55  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms 
 Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513321  (issued  October  2000).  56 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms  Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513321  (issued  October  2000).  The  census  data  do  not  provide 


 a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of  1,500  or  fewer  employees;  the  largest  category  provided  is  Firms  with  1000  employees  or  more. 
 57  Revision  of  Part  22  and  Part  90  of  the  Commissions  Rules  to  Facilitate  Future  Development  of  Paging  Systems, 
 Second  Report  and  Order,  12  FCC  Rcd  2732,  2811-  2812,  paras.  178-  181  (Paging  Second  Report  and  Order);  see  also  Revision  of  Part  22  and  Part  90  of  the  Commissions  Rules  to  Facilitate  Future  Development  of  Paging 


 Systems,  Memorandum  Opinion  and  Order  on  Reconsideration,  14  FCC  Rcd  10030,  10085-  10088,  paras.  98-  107  (1999). 
 58  Paging  Second  Report  and  Order,  12  FCC  Rcd  at  2811,  para.  179. 
 59  See  Letter  to  Amy  Zoslov,  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless  Telecommunications 
 Bureau,  from  Aida  Alvarez,  Administrator,  Small  Business  Administration,  dated  December  2,  1998.  60 
 See  929  and  931  MHz  Paging  Auction  Closes,  Public  Notice,  15  FCC  Rcd  4858  (WTB  2000).  61 
 See  929  and  931  MHz  Paging  Auction  Closes,  Public  Notice,  15  FCC  Rcd  4858  (WTB  2000).  62 
 See  Lower  and  Upper  Paging  Band  Auction  Closes,  Public  Notice,  16  FCC  Rcd  21821  (WTB  2002).  63 
 See  Lower  and  Upper  Paging  Bands  Auction  Closes,  Public  Notice,  18  FCC  Rcd  11154  (WTB  2003). 
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 According  to  the  most  recent  Trends  in  Telephone  Service,  608  private  and  common  carriers  reported  that  they  were  engaged  in  the  provision  of  either  paging  or  other  mobile  services.  64  Of  these,  we  estimate 
 that  589  are  small,  under  the  SBA-  approved  small  business  size  standard.  65  We  estimate  that  the  majority  of  common  carrier  paging  providers  would  qualify  as  small  entities  under  the  SBA  definition. 


 D.  Description  of  Projected  Reporting,  Recordkeeping,  and  Other  Compliance  Requirements 
 26.  There  are  several  compliance  requirements  addressed  in  this  item.  One,  carriers  are  responsible  for  assuring  that  toll-  free  numbers,  when  they  appear  on  a  telephone  bill,  must  appear  in  a 
 separate  section  of  the  bill  in  order  to  make  it  easier  for  consumers  to  understand  charges  that  stem  from  calls  to  toll-  free  numbers.  66  Carriers  are  already  required  to  separate  out  a  variety  of  calls,  e.  g.  local 
 versus  long  distance;  therefore,  we  do  not  expect  this  compliance  requirement  to  be  particularly  burdensome  for  carriers  even  small  carriers.  This  is  not  a  new  requirement,  just  a  clarification  of  an 
 existing  one. 
 27.  Two,  in  order  to  operate  outside  900  numbers,  all  audiotext  information  services    not  only  those  using  toll-  free  numbers    must  be  provided  pursuant  to  a  written  (or  the  electronic  equivalent) 


 presubscription  agreement  or  made  through  payments  involving  direct  remittance,  prepaid  account,  or  debit,  credit,  charge,  or  calling  cards.  67  These  proposed  policies  and  rules  are  designed  to  clarify  the 
 existing  requirement  that  the  presubscription  or  comparable  agreement  be  in  writing  or  make  use  of  one  of  the  payment  methods  discussed  above.  As  such,  any  proposed  policy  or  rule  changes  do  not  constitute 
 an  additional  compliance  burden. 
 E.  Steps  Taken  to  Minimize  Significant  Economic  Impact  on  Small  Entities,  and  Significant  Alternatives  Considered 


 28.  The  RFA  requires  an  agency  to  describe  any  significant,  specifically  small  business,  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  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.  68 
 29.  Commenters,  in  2003,  noted  that  audiotext  service  providers  found  the  900  number  regime  has  become  a  difficult  environment  in  which  to  operate  a  business.  69  Some  businesses 


 64  See  Trends  in  Telephone  Service,  Industry  Analysis  Division,  Wireline  Competition  Bureau,  Table  5.  3  (Number 
 of  Telecommunications  Service  Providers  that  are  Small  Businesses)  (May  2002).  65 
 13  C.  F.  R.    121.201,  NAICS  code  517211.  66 
 See  NPRM  supra  paras.  25-  27.  67 
 See  NPRM  supra  paras.  22-  24.  68 
 5  U.  S.  C.    603(  c)(  1)    (c)(  4).  69 
 See,  e.  g.,  Network  for  Online  Commerce  2003  Comment  at  8,  Pilgrim  Telephone,  Inc.  2003  Comment  at  2,  HFT,  Inc.,  Lo-  Ad  Communications  T.  B.  I.  and  Global  Charge  2003  Joint  Comment  at  13-  14,  Simpson  2003  Comment  at 


 2. 
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 complained  that  charges  for  audiotext  information  services  were  dropped  from  carriers  bills.  70  In  order  to  address  this  concern  we  are  considering  allowing  carriers  to  accept  recordings  of  customer  oral 
 verifications  as  evidence  that  charges  through  900  numbers  should  not  be  removed  from  the  telephone  bill.  71  These  verifications  would  indicate  that  the  customer  understood  and  agreed  to  the  900  number 
 charges.  We  expect  this  alternative  to  assist  small  businesses,  both  carriers  and  audiotext  information  service  providers,  by  facilitating  billing  on  a  telephone  bill  as  opposed  to  a  credit  card  or  other  such 
 means.  We  note  in  the  primary  item  that  disputes  over  such  charges  were  greatly  reduced  once  oral  verification  was  implemented  in  another  country.  72 


 F.  Federal  Rules  that  May  Duplicate,  Overlap,  or  Conflict  with  the  Proposed  Rules 
 30.  Federal  Trade  Commission  (FTC)  regulations  pursuant  to  the  Telephone  Disclosure  and  Dispute  Resolution  Act  (TDDRA),  73  prescribe  federal  standards  governing  some  audiotext  information 


 service  providers  and  all  entities,  including  common  carriers,  which  bill  and  collect  for  interstate  information  services.  74  The  FTC  has  noted  that  the  expansion  of  the  definition  of  covered  services  under 
 its  governing  statutes  from  Titles  II  and  III  of  TDDRA,  does  not  have  any  effect  upon  the  main  definition  of  pay-  per-  call  services  under  Title  I  of  TDDRA,  codified  as  section  228.  75  The  FTC  initiated  a 
 proceeding  in  this  area  in  1998,  but  at  this  time  it  has  not  issued  final  conclusions.  76 


 70  See  NPRM  supra  para.  20. 
 71  See  NPRM  supra  para.  21. 
 72  See  NPRM  supra  para.  21. 
 73  The  Telephone  Disclosure  and  Dispute  Resolution  Act  of  1992,  which  added  section  228  to  the  Communications 
 Act  of  1934,  Pub.  L.  No,  192-  556,  106  Stat.  4181  (1992)  (codified  at  47  U.  S.  C.    228,  and  15  U.  S.  C.    5711-  14  and    5721-  24). 


 74  16  C.  F.  R.    308.1  et  seq. 
 75  Pay-  per-  Call  Rule;  Proposed  Rule,  Federal  Trade  Commission,  63  Fed.  Reg.  58524,  58525,  n.  18  (October  30, 
 1998).  76 
 Pay-  per-  Call  Rule;  Proposed  Rule,  Federal  Trade  Commission,  63  Fed.  Reg.  58524. 
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 APPENDIX  C 
 COMMENTERS 


 96-  146  Commenters  of  2003:  AT&  T  Corp. 
 AT&  T  Wireless  Services  AWS  Direct  Marketing  Association 
 Federal  Bureau  of  Investigation  FBI  James  Fox 
 Marylin  Fox  HFT,  Inc.,  LO-  AD  Communications,  T.  B.  I. 
 and  Global  Charge  John  P.  Lawless 
 MicroVoice  Applications,  Inc.  Network  for  Online  Commerce 
 Northwest  Nevada  Telco  Pilgrim  Telephone,  Inc. 
 Adelle  Simpson  Simpson  Z-  tel  Communications  Inc.  * 


 96-  146  Reply  Commenters  of  2003:  AT&  T  Corp. 
 Metro  One  Telecommunications  Pilgrim  Telephone,  Inc 
 Adelle  Simpson  Simpson 
 96-  146  Commenters  in  1996:  Alliance  of  Young  Families  Young  Families 
 American  Network,  Inc.  AT&  T  Corp. 
 California  Public  Utilities  Commission  Jacqueline  K.  Chockey 
 Direct  Marketing  Association  DMA  Andrew  Egendorf 
 Excel  Telecommunications,  Inc.  Florida  Public  Service  Commission  FPSC 
 Federal  Trade  Commission  FTC  GTE  Services  Corp.  GTE 
 Representative  Bart  Gordon  HFT,  Inc.,  LO-  AD  Communications,  Corp. 
 and  American  International  Communications  Interactive  Services  Association 
 International  Telemedia  Association  MCI  Telecommunications  Corp. 
 MOVO  Media  Inc.  National  Association  of  Attorneys  General,  NAAG 


 *  Filed  as  letter. 
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 Telecommunications  Subcommittee  Northern  Mariana  Islands,  Commonwealth  of 
 Ohio  Public  Utilities  Commission  Pacific  Bell  and  Nevada  Bell 
 Pilgrim  Telephone,  Inc.  Schuyler  County  Economic  Development  Corp. 
 Southwestern  Bell  Telephone  Co.  TeleServices  Industry 
 Total  Telecommunications,  Inc.  University  of  Missouri-  Columbia 
 United  States  Telephone  Association 
 96-  146  Reply  Commenters  in  1996:  900  Capital  Services  Inc. 
 Alliance  of  Young  Families  AT&  T  Corp. 
 Atlantic  Tele-  Network,  Inc.  Bellsouth  Corp 
 GTE  Service  Corp.  HFT,  Inc.,  LO-  AD  Communications,  Corp. 
 and  American  International  Communications  MCI  Telecommunications  Corp. 
 National  Association  of  Regulatory  Utility  Commissioners  NARUC  Ohio  Consumers  Counsel 
 Pilgrim  Telephone,  Inc.  Starlink  Communications,  LLC 
 Southwestern  Bell  Telephone  Co.  TeleServices  Industry 
 Total  Telecommunications,  Inc.  US  West  Inc. 
 United  States  Telephone  Association  Western  Illinois  University 
33