*Pages 1--63 from  Microsoft Word - 25958.doc*
 Federal  Communications  Commission  FCC  03-  42 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 

 In  the  Matter  of 
 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 

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 CC  Docket  No.  94-  129 

 THIRD  ORDER  ON  RECONSIDERATION  AND  SECOND  FURTHER  NOTICE  OF  PROPOSED  RULEMAKING 
 Adopted:  February  28,  2003  Released:  March  17,  2003 
 By  the  Commission: 

 I.  INTRODUCTION  AND  BACKGROUND 
 1.  In  this  Third  Order  on  Reconsideration  and  Second  Notice  of  Proposed  Rulemaking  (Order)  in  the  above-  captioned  proceeding,  we  address  certain  issues  raised  in  petitions  for  reconsideration  of  the 

 Second  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking  (Second  Report  and  Order),  1  the  First  Order  on  Reconsideration  (First  Reconsideration  Order)  2  and  the  Third  Report  and  Order  and 
 Second  Order  on  Reconsideration  (Third  Report  and  Order)  3  implementing  section  258  of  the  Communications  Act  of  1934  (Act),  as  amended  by  the  Telecommunications  Act  of  1996  (1996  Act).  4 
 Section  258  prohibits  any  telecommunications  carrier  from  submitting  or  executing  an  unauthorized 
 1  Implementation  of  the  Subscriber  Carrier  Selection  Changes  Provisions  of  the  Telecommunications  Act  of  1996; 
 Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers  Long  Distance  Carriers,  CC  Docket  No.  94-  129,  Second  Report  and  Order  and  Further  Notice  of  Proposed  Rule  Making,  14  FCC  Rcd  1508  (1998)  (Second 

 Report  and  Order),  stayed  in  part,  MCI  WorldCom  v.  FCC,  No.  99-  1125  (D.  C.  Cir.  May  18,  1999)  (Stay  Order),  motion  to  dissolve  stay  granted,  MCI  WorldCom  v.  FCC,  No.  99-  1125  (D.  C.  Cir.  June  27,  2000)  (Order  Lifting 
 Stay).  2 
 Implementation  of  the  Subscriber  Carrier  Selection  Changes  Provisions  of  the  Telecommunications  Act  of  1996;  Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers  Long  Distance  Carriers,  CC  Docket  No.  94- 

 129,  First  Order  on  Reconsideration,  15  FCC  Rcd  8158  (2000).  3 
 Implementation  of  the  Subscriber  Carrier  Selection  Changes  Provisions  of  the  Telecommunications  Act  of  1996  and  Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers  Long  Distance  Carriers,  CC  Docket  No. 

 94-  129,  Third  Report  and  Order  and  Second  Order  on  Reconsideration,  15  FCC  Rcd  15996  (2000)  (Third  Report  and  Order);  Errata,  DA  00-  2163  (rel.  Sept.  25,  2000);  Erratum,  DA  00-  292  (rel.  Oct.  4,  2000);  Implementation  of 
 the  Subscriber  Carrier  Selection  Changes  Provisions  of  the  Telecommunications  Act  of  1996,  Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers  Long  Distance  Carriers,  CC  Docket  No.  94-  129,  Order,  16  FCC 
 Rcd  4999  (2001).  4 
 47  U.  S.  C.    258(  a).  Telecommunications  Act  of  1996,  Pub.  L.  No.  104-  104,  110  Stat.  56  (1996). 
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 change  in  a  subscribers  selection  of  a  provider  of  telephone  exchange  service  or  telephone  toll  service.  5  This  practice,  known  as  slamming,  distorts  the  telecommunications  market  by  enabling  companies  that 
 engage  in  fraudulent  activity  to  increase  their  customer  and  revenue  bases  at  the  expense  of  consumers  and  law-  abiding  companies. 

 2.  In  the  Second  Report  and  Order,  First  Reconsideration  Order,  and  Third  Report  and  Order,  the  Commission  promulgated  rules  pursuant  to  section  258  of  the  Act  to  combat  the  practice  of 
 slamming.  6  In  the  Second  Report  and  Order,  the  Commission  sought  to  eliminate  the  profits  associated  with  slamming  by  broadening  the  scope  of  its  carrier  change  rules  and  adopting,  among  other  things, 
 more  rigorous  slamming  liability  and  carrier  change  verification  measures.  When  the  Commission  released  the  Second  Report  and  Order,  it  recognized  that  additional  revisions  to  the  slamming  rules  could 
 further  improve  the  preferred  carrier  change  process  and  prevent  unauthorized  changes.  Thus,  concurrent  with  the  release  of  the  Second  Report  and  Order,  the  Commission  issued  a  Further  Notice  of  Proposed 
 Rulemaking  (Further  Notice).  7  In  the  Third  Report  and  Order  and  Second  Order  on  Reconsideration,  the  Commission  adopted  a  number  of  rules  proposed  in  the  Further  Notice,  and  addressed  most  issues  raised 
 on  reconsideration  of  the  Second  Report  and  Order.  8  In  addition,  in  the  First  Reconsideration  Order,  9  the  Commission  amended  portions  of  the  rules  regarding  liability  for  slamming  that  had  been  stayed  by  the 
 D.  C.  Circuit  Court.  10 
 3.  In  this  Order,  we  address  petitions  filed  by  a  coalition  of  rural  local  exchange  carriers  (Rural  LECs)  and  the  National  Telephone  Cooperative  Association  (NTCA)  seeking  reconsideration  of 

 Commission  rules  prohibiting  carriers  that  effect  requests  for  subscriber  carrier  changes  submitted  by  other  carriers  from  re-  verifying  such  requests  before  executing  the  requested  changes.  11  We  also 
 address  a  petition  filed  by  SBC  Communications,  Inc.  (SBC)  seeking  clarification  of  our  prohibition  on  the  use  of  carrier  change  information  for  marketing  purposes  and  of  the  application  of  our  slamming  rules 
 to  Responsible  Organization  (RespOrg)  changes  for  800  number  service.  12  Additionally,  we  address  a  petition  filed  by  AT&  T  seeking  clarification  regarding  the  application  of  the  slamming  rules  to  newly 

 5  47  U.  S.  C.    258(  a). 
 6  47  C.  F.  R.    64.1100  et  seq.  Prior  to  the  adoption  of  section  258  of  the  Act,  the  Commission  had  taken  various 
 steps  to  address  the  slamming  problem;  the  adoption  of  section  258  expanded  the  Commissions  authority  in  this  area.  See,  e.  g.,  Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers'  Long  Distance  Carriers,  CC 

 Docket  No.  94-  129,  Report  and  Order,  10  FCC  Rcd  9560  (1995),  stayed  in  part,  11  FCC  Rcd  856  (1995);  Policies  and  Rules  Concerning  Changing  Long  Distance  Carriers,  CC  Docket  No.  91-  64,  7  FCC  Rcd  1038  (1992), 
 reconsideration  denied,  8  FCC  Rcd  3215  (1993);  Investigation  of  Access  and  Divestiture  Related  Tariffs,  CC  Docket  No.  83-  1145,  Phase  I,  101  F.  C.  C.  2d  911,  101  F.  C.  C.  2d  935,  reconsideration  denied,  102  F.  C.  C.  2d  503 
 (1985).  7 
 Second  Report  and  Order,  14  FCC  Rcd  at  1591-  1609,    139-  182.  8 
 Third  Report  and  Order,  15  FCC  Rcd  15996  (2000).  9 
 First  Order  on  Reconsideration,  15  FCC  8158  (2000).  10 
 Shortly  after  the  release  of  the  First  Order  on  Reconsideration,  the  FCC  filed  a  motion  to  dissolve  the  stay  on  the  slamming  liability  rules  that  the  D.  C.  Circuit  had  imposed  in  its  Stay  Order.  Motion  of  the  FCC  to  Dissolve  the 

 Stay,  filed  May  18,  2000  in  MCI  WorldCom,  Inc.  v.  FCC,  D.  C.  Cir.  No.  99-  1125.  On  June  27,  2000,  the  D.  C.  Circuit  issued  the  Order  Lifting  Stay,  which  granted  the  Commissions  unopposed  motion  and  lifted  the  stay. 
 11  See  Rural  LECs,  Petition  for  Reconsideration,  CC  Docket  No.  94-  129,  at  3-  10  (filed  March  18,  1999);  National 
 Telephone  Cooperative  Association,  Petition  for  Reconsideration,  CC  Docket  No.  94-  129,  at  4-  18  (filed  March  18,  1999). 

 12  SBC  Communications,  Inc.,  Petition  for  Reconsideration  and  for  Clarification,  CC  Docket  No.  94-  129,  at  13-  14 
 (filed  March  18,  1999). 
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 installed  lines,  and  petitions  filed  by  Sprint  and  WorldCom  seeking  the  elimination  of  certain  carrier  reporting  requirements  and  modification  of  certain  carrier  liability  rules.  Finally,  we  address  petitions  for 
 reconsideration  of  our  Third  Report  and  Order  in  which  the  Commission,  among  other  things,  modified  its  rules  on  the  verification  of  carrier  change  requests,  including  third  party  verification  (TPV)  using  a 
 three-  way  conference  call  or  a  call  through  an  automated  verification  system.  13 
 4.  This  Order  also  contains  a  Further  Notice  of  Proposed  Rulemaking,  in  which  we  seek  comment  on  rule  modifications  with  respect  to  third  party  verifications. 

 II.  RE-  VERIFICATION  OF  CARRIER  CHANGE  REQUESTS  BY  EXECUTING  CARRIERS 
 A.  Background 
 5.  In  the  Second  Report  and  Order,  the  Commission  set  forth  general  distinctions  between  submitting  carriers  and  executing  carriers  in  the  context  of  carrier  change  requests.  A  submitting 

 carrier  is  defined  as  any  telecommunications  carrier  that  (1)  requests  on  the  behalf  of  a  subscriber  that  the  subscribers  telecommunications  carrier  be  changed;  and  (2)  seeks  to  provide  retail  services  to  the  end 
 user  subscriber.  14  An  example  of  a  submitting  carrier  is  an  interexchange  carrier  (IXC)  seeking  to  provide  interexchange  service  to  an  end  user.  An  executing  carrier  is  defined  as  any  telecommunications  carrier 
 that  effects  a  request  that  a  subscribers  telecommunications  carrier  be  changed.  15  The  Commission  clarified  that  an  executing  carrier  has  actual  physical  responsibility  for  making  the  change  to  the 
 subscribers  service,  as  opposed  to  merely  forwarding  a  carrier  change  request  on  behalf  of  a  subscriber.  16 
 6.  In  the  Second  Report  and  Order,  the  Commission  affirmed  its  tentative  conclusion  that  submitting  carriers  should  be  responsible  for  verification  of  carrier  change  requests  and,  regardless  of  the 

 solicitation  method  used,  should  employ  one  of  three  verification  options  (written  letters  of  agency  (LOAs),  electronic  authorization,  or  third  party  verification).  17  The  Commission  further  concluded  that 
 an  executing  carrier  may  not  re-  verify  the  submitting  carriers  initial  verification  of  a  change  request.  18  The  Commission  agreed  with  parties  that  such  re-  verifications  would  be  expensive,  unnecessary,  and 
 duplicative.  The  Commission  emphasized,  however,  that  executing  carriers  must  act  to  ensure  that  subscriber  change  requests  are  executed  as  quickly  and  as  accurately  as  possible,  without  unreasonable 
 delay  and  using  the  most  technologically  efficient  means  available.  19 
 7.  The  Commission  expressed  concern  in  the  Second  Report  and  Order  that  executing  carriers  would  have  the  incentive  and  ability  to  use  the  verification  process  as  a  means  of  delaying  or  denying 

 carrier  change  requests  in  order  to  benefit  themselves  or  their  affiliates.  20  While  the  Commission  agreed 
 13  Third  Report  and  Order,  15  FCC  Rcd  at    38. 
 14  See  47  C.  F.  R.    64.  1100(  a);  Second  Report  and  Order,  14  FCC  Rcd  at  1564-  65,    92. 
 15  See  47  C.  F.  R.    64.  1100(  b);  Second  Report  and  Order,  14  FCC  Rcd  at  1565-  66,    94. 
 16  Id.  The  Commission  also  stated  that,  in  the  current  environment,  an  IXC  could  also  be  an  executing  carrier, 
 e.  g.,  if  a  facilities-  based  IXC  resells  service  to  a  switchless  reseller.  See  Second  Report  and  Order,  14  FCC  Rcd  at  1566,    95. 

 17  See  Second  Report  and  Order,  14  FCC  Rcd  at  1567,    97.  In  a  subsequent  order,  the  Commission  added  a  fourth 
 verification  option  the  Internet  LOA  (Third  Report  and  Order,  15  FCC  Rcd  15996,  at    6-  21).  18 
 See  Second  Report  and  Order,  14  FCC  Rcd  at  1567,    97;  see  47  C.  F.  R.    64.  1120(  a)(  2).  19 
 Id.  20 
 Id.  at    98. 
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 with  LEC  commenters  that  allowing  executing  carriers  to  re-  verify  carrier  change  requests  could  help  to  deter  slamming,  it  ultimately  concluded  that  the  anti-  competitive  effects  of  re-  verification  outweighed  the 
 potential  benefits.  21  The  Commission  also  noted  that  section  222(  b)  of  the  Act  states  that  a  carrier  that  receives  or  obtains  proprietary  information  from  another  carrier  for  purposes  of  providing  any 
 telecommunications  service  shall  use  such  information  only  for  such  purpose.  22  The  Commission  found  that  information  contained  in  a  submitting  carriers  change  request  is  proprietary  information  such  that 
 that  the  executing  carrier  may  only  use  that  information  to  provide  service  to  the  submitting  carriers  (i.  e.,  changing  the  subscribers  carrier),  and  may  not  make  additional  use  of  that  information  for  re-  verification 
 purposes.  23 
 8.  The  Commission  was  also  concerned  that  re-  verification  by  executing  carriers  could  function  as  a  de  facto  preferred  carrier  freeze,  even  in  situations  where  a  subscriber  has  not  requested  such  a 

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

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

 B.  Rural  LEC  and  NTCA  Petitions  for  Reconsideration 
 10.  Rural  LECs  and  NTCA  ask  the  Commission  to  reconsider  and  reverse  the  prohibition  on  executing  carrier  re-  verifications.  31  According  to  Rural  LECs,  because  of  their  close  relationships  with 

 21  Id.  at    99. 
 22  47  U.  S.  C.    222(  b). 
 23  See  Second  Report  and  Order,  14  FCC  Rcd  at  1567,    99. 
 24  Id.  at    99-  101.  A  preferred  carrier  freeze  prevents  a  change  in  a  subscribers  preferred  carrier  selection  unless 
 the  subscriber  gives  the  carrier  from  whom  the  freeze  was  requested  his  or  her  express  written  or  oral  consent  (Second  Report  and  Order,  14  FCC  Rcd  at  1569,  n.  348). 

 25  Id. 
 26  See  Second  Report  and  Order,  14  FCC  Rcd  at  1567,    100. 
 27  Id. 
 28  Id. 
 29  Id. 
 30  Id. 
 31  Rural  LECs  Petition;  NTCA  Petition. 
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 their  customers,  small,  rural  LECs  are  uniquely  positioned  to  provide  a  line  of  defense  against  slamming.  32  Rural  LECs  state  that  their  own  voluntary  executing  carrier  verification  efforts  prevented 
 slamming  in  the  past,  and  they  assert  that  executing  carriers  found  that  40-  50%  of  change  requests  were  unauthorized.  33  NTCA  agrees  that,  based  on  the  number  of  potential  slamming  cases  uncovered  by 
 executing  carriers  before  the  prohibition,  it  is  clear  that  re-  verification  deters  slamming.  34  Rural  LECs  assert  that  executing  carrier  verification  serves  as  an  additional  safeguard  against  slamming  and,  contrary 
 to  the  Commissions  finding  in  the  Second  Report  and  Order,  there  is  no  assurance  that  under  the  Commissions  modified  rules  slamming  practices  will  abate,  given  the  large  financial  incentives  that 
 remain.  35 
 11.  Rural  LECs  and  NTCA  further  assert  that  executing  carriers  have  a  vested  interest  in  verifying  the  accuracy  of  change  requests  because  they  are  often  customers  primary  point  of  contact  for 

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

 12.  NTCA  also  states  that,  because  an  executing  carrier  could  be  liable  for  harms  caused  by  inappropriate  carrier  changes,  executing  carriers  assume  great  risk  when  relying  on  a  submitting  carriers 
 claim  to  be  the  agent  of  the  end  user.  42  NTCA  asserts  that  the  reasonableness  of  a  LECs  belief  in  the  apparent  authority  of  the  IXC  will  be  difficult  to  establish  given  the  high  incidence  of  slamming.  43 

 32  Rural  LECs  Petition  at  2. 
 33  Id.  at  3-  5;  NTCA  Petition  at  13-  15.  See  also  Letter  of  the  Montana  Telecommunications  Association  to  Magalie 
 Roman  Salas,  Secretary,  FCC,  received  April  22,  1999  (asserting  that  MTA  companies  were  able  to  confirm  through  customer  verification  that  as  many  as  80%  of  change  orders  were  the  result  of  slamming). 

 34  See  NTCA  Petition  at  20-  22. 
 35  Rural  LECs  Petition  at  10-  11. 
 36  Id.  at  2-  3,  9;  NTCA  Petition  at  5-  6. 
 37  Rural  LECs  Petition  at  6. 
 38  Rural  LECs  report  specific  instances  of  fraudulent  inducements  and  misstatements  by  LECs  (Rural  LECs  Petition 
 at  6-  8).  39 
 NTCA  Petition  at  17-  18.  40 
 Id.  at  23.  41 
 U  S  West  Support/  Opposition  at  12.  42 
 NTCA  Petition  at  13-  14.  43 
 Id. 
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 Furthermore,  NTCA  states  that,  under  the  principles  of  agency  law,  an  agent  has  no  right  or  reason  to  require  information  to  be  withheld  from  the  principal.  44  NTCA  acknowledges  that,  under  section  222(  b) 
 of  the  Act,  an  executing  carrier  may  not  disclose  carrier  change  information  to  other  IXCs  or  to  any  other  party  for  competitive  benefit.  45  However,  NTCA  argues  that  the  executing  carrier  would  be  using  the 
 proprietary  information  to  prevent  anti-  competitive  practices,  not  to  gain  a  competitive  advantage.  46  NTCA  also  asserts  that  communications  between  an  executing  carrier  and  its  own  customers  regarding 
 carrier  change  verification  information  does  not  violate  section  222(  b)  because  the  information  is  proprietary  only  as  to  the  customers  themselves.  NTCA  states  that  it  is  illogical  to  presume  that  Congress 
 intended  that  a  subscribers  own  proprietary  information  not  be  divulged  to  him  or  her.  47 
 13.  Finally,  Rural  LECs  and  NTCA  argue  that,  by  restricting  the  ability  of  executing  carriers  to  communicate  with  their  customers,  the  Commission  is  unduly  interfering  with  executing  carriers  First 

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

 14.  Several  commenters  oppose  the  petitions  of  Rural  LECs  and  NTCA,  stating  that  LECs  have  the  incentive  to  try  to  delay  carrier  changes  and/  or  market  their  own  products  to  customers  under  the 
 guise  of  verifying  the  intent  to  change  carriers.  53  AT&  T  argues  that  petitioners  have  failed  to  demonstrate  that  protection  of  their  purported  reputation  interest  should  take  precedence  over  the  specific  interest  of 
 customers  in  the  timely  implementation  of  their  orders,  and  the  public  interest  in  protection  of  a  competitive  telecommunications  marketplace.  54  AT&  T  asserts  that  petitioners  have  in  any  case  failed  to 
 provide  any  factual  evidence  that  customers  blame  them  for  slamming.  55  WorldCom  argues  that  the  petitioners  fail  to  explain  why  the  new,  Commission-  approved  verification  processes  will  be  insufficient 

 44  NTCA  Petition  at  13-  15. 
 45  Id.  at  9. 
 46  Id.  at  16-  17. 
 47  Id.  at  12.  See  also  Letter  of  Telecommunications  Research  &  Action  Center  (  TRAC  Letter)  to  Magalie  Roman 
 Salas,  Secretary,  FCC,  dated  September  28,  1999,  at  2.  48 
 NTCA  Petition  at  24.  49 
 Id.  at  24-  25.  50 
 Letter  of  David  Cosson  and  Marci  Greenstein,  Counsel  for  Rural  LECs,  to  Magalie  Roman  Salas,  Secretary,  FCC,  dated  June  27,  2000  (Rural  LECs  ex  parte),  (citing  United  States  v.  Playboy  Entertainment  Group),  529  U.  S.  803 

 (2000)  (Playboy).  51 
 Rural  LECs  ex  parte  at  1-  2.  52 
 Id.  at  2.  53 
 See,  e.  g.,  Qwest  Comments  at  14;  Cable  &  Wireless  Comments  at  5-  6.  54 
 AT&  T  Comments  at  11.  55 
 Id. 
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 to  deter  slamming.  56  Qwest  states  that  the  prohibition  against  re-  verification  by  executing  carriers  will  become  even  more  important  as  Regional  Bell  Operating  Companies  (  RBOCs)  are  able  to  offer  more 
 services  pursuant  to  section  271  of  the  Act.  57 
 C.  Discussion 
 15.  We  disagree  with  petitioners  that  our  prohibition  on  executing  carrier  re-  verification  fails  to  withstand  First  Amendment  analysis.  58  As  an  initial  matter,  the  Playboy  case  cited  by  Rural  LECs  does 

 not  provide  the  proper  framework  for  analysis  of  the  speech  at  issue  here.  The  ability  of  an  executing  carrier  to  verify  its  customers  change  requests  is  by  its  nature  commercial  speech  because  it  concerns  the 
 act  of  solicitation  and  consumer  purchase  of  services  provided  by  the  consumers  carrier  of  choice.  59  In  contrast,  the  speech  at  issue  in  Playboy  was  not  commercial  speech,  was  restricted  solely  on  the  basis  of 
 its  content,  and  was  therefore  subject  to  a  different  level  of  protection  under  the  First  Amendment,  i.  e.,  the  speech  was  subject  to  the  strictest  level  of  scrutiny.  Thus,  in  Playboy,  the  Court  found  that  the  statutory 
 provision  at  issue  should  be  narrowly  tailored  to  promote  a  compelling  government  interest  and,  if  a  less  restrictive  alternative  would  serve  the  Governments  purpose,  that  alternative  must  be  used.  60 

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

 17.  With  respect  to  the  first  prong  of  Central  Hudson,  we  conclude  that  the  governmental  interest  in  preventing  anti-  competitive  behavior  and  removing  impediments  to  consumer  choice,  is  substantial. 
 56  WorldCom  Comments  at  5-  6. 
 57  Id. 
 58  The  First  Amendment  states  that  Congress  shall  make  no  law  .  .  .  abridging  the  freedom  of  speech.  U.  S.  Const. 
 Amend.  I.  Although  the  First  Amendment  on  its  face  applies  to  legislation  enacted  by  Congress,  it  is  in  practice  much  broader  and  encompasses,  amongst  other  things,  regulations  promulgated  by  administrative  agencies.  See, 

 e.  g.,  Rust  v.  Sullivan,  500  U.  S.  173,  192  (1991).  59 
 See  U  S  West  v.  FCC,  182  F.  2d.  at  1233,  n.  4  (  when  the  sole  purpose  of  the  intra-  carrier  speech  based  on  CPNI  is  to  facilitate  the  marketing  of  telecommunications  services  to  individual  customers,  we  find  the  speech  integral  to  and 

 inseparable  from  the  ultimate  commercial  solicitation);  See  also  Virginia  State  Board  of  Pharmacy  v.  Virginia  Citizens  Consumer  Council  Inc.,  425  U.  S.  748,  760  (1976). 
 60  See  Playboy,  529  U.  S.  at  811  ([  T]  he  speech  in  question  is  defined  by  its  content;  and  the  statute  which  seeks  to 
 regulate  it  is  content-  based).  In  Playboy,  the  Supreme  Court  also  stated  that  the  restriction  at  issue  in  that  case  focuses  only  on  the  content  of  the  speech  and  the  direct  impact  that  speech  has  on  its  listeners,  and  concluded  that 

 [  T]  his  is  the  essence  of  content-  based  regulation.  Id.  at  811,  (citing  Boos  v.  Barry,  485  U.  S.  312,  321  (1988)).  See  also  Playboy,  529  U.  S.  at  813  (  Since    505  is  a  content-  based  speech  restriction,  it  can  stand  only  if  it  satisfies 
 strict  scrutiny  .  .  .  [I]  f  a  statute  regulates  speech  based  on  its  content,  it  must  be  narrowly  tailored  to  promote  a  compelling  government  interest.  If  a  less  restrictive  alternative  would  serve  the  Governments  purpose,  the 
 legislature  must  use  that  alternative).  61 
 See  Central  Hudson  Gas  and  Electric  Corp.  v.  Public  Service  Commn  of  New  York,  447  U.  S.  557,  562  (1980).  62 
 Central  Hudson,  447  U.  S.  at  566.  See  also  Lorillard  Tobacco  Co.  v.  Reilly,  121  S.  Ct.  2404,  2421  (2001).  In  addition,  under  Central  Hudson,  if  the  speech  in  question  concerns  illegal  activity  or  is  misleading,  the  government 

 may  freely  regulate  the  speech.  In  the  instant  proceeding,  no  commenter  has  suggested  that  the  speech  at  issue  is  misleading  or  involves  illegal  activity. 
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 Neither  Rural  LECs  nor  NTCA  dispute  this  assertion;  as  noted  above,  NTCA  in  fact  agrees  that  these  interests  are  substantial.  We  also  note  that  the  Supreme  Court  has  recognized  that  eliminating  restraints 
 on  competition  is  a  substantial  government  interest.  63  We  remain  concerned  that,  in  todays  dynamic  telecommunications  marketplace,  re-  verifications  by  executing  carriers  before  executing  carrier  changes, 
 in  addition  to  the  other  verification  safeguards  required  by  our  rules,  are  duplicative  and  create  unnecessary  burdens  on  customers  seeking  to  make  carrier  change  requests,  and  as  such  can  impede 
 consumer  choice.  As  the  Commission  stated  in  the  Second  Report  and  Order,  executing  carriers  would  have  both  the  incentive  and  ability  to  delay  or  deny  carrier  changes,  using  verification  as  an  excuse,  in 
 order  to  benefit  themselves  or  their  affiliates.  64 
 18.  As  to  the  second  prong  of  Central  Hudson,  we  conclude  that  the  decision  to  prohibit  carriers  from  imposing  an  additional,  duplicative  procedure  on  consumers  directly  advances  the  substantial 

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

 19.  In  addition,  such  an  alternative  would  not  eliminate  unnecessary  burdens  on  consumers.  As  with  unauthorized  preferred  carrier  freezes,  re-  verification  by  its  very  nature  imposes  additional  burdens 
 on  consumers  and  diminishes  consumer  choice.  TRA  asserts  that,  in  the  rough  and  tumble  telecommunications  marketplace,  the  costs  to  competition  and  consumer  choice  of  allowing  executing 
 carriers  to  re-  verify  carrier  change  requests  are  painfully  obvious  and  would  be  much  higher  than  any  potential  benefits  of  allowing  this  practice.  69  TRA  states  that  allowing  carrier  change  information  to  be 

 63  See,  e.  g.,  Turner  Broadcasting  System  v.  FCC,  512  U.  S.  622,  663  (1994). 
 64  Second  Report  and  Order,  14  FCC  Rcd  at  1568,    99. 
 65  See,  e.  g.,  47  U.  S.  C.    258,  201(  b),  206-  208;  See  Second  Report  and  Order,  14  FCC  Rcd  at  1510-  11,    1. 
 66  See  Board  of  Trustees  of  the  State  University  of  New  York  v.  Fox,  492  U.  S.  469,  480  (1989). 
 67  NTCA  Comments  at  23. 
 68  Second  Report  and  Order,  14  FCC  Rcd  at  1571,    334. 
 69  Telecommunications  Resellers  Association  (TRA)  Comments  at  10-  11. 
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 used  by  executing  carriers  for  re-  verification  would  be  analogous  to  authorizing  GM  to  confirm  each  sale  made  by  Ford  before  the  sale  can  take  place.  70 
 20.  We  agree  that  it  is  difficult  to  imagine  how  a  company  that  imposes  a  verification  requirement  on  a  consumers  purchase  of  a  competitors  product  reduces  unnecessary  delays  and 
 increases  choice  for  consumers.  We  continue  to  believe  that  the  Commissions  prohibition  on  executing  carrier  verification  advances  and  is  proportionate  to  the  goal  of  preventing  anti-  competitive  behavior  by 
 executing  carriers  and  protecting  consumer  choice.  As  the  Commission  stated  in  the  Second  Report  and  Order,  even  with  this  prohibition,  executing  carriers  have  other  means  of  protecting  their  customers  that 
 will  not  interfere  with  competition  or  undermine  consumer  choice.  For  example,  the  Commission  noted  that  executing  carriers  can  offer  a  preferred  carrier  freeze  option  to  customers  who  are  concerned  about 
 slamming  and  authorize  such  a  freeze,  and  can  alert  customers  to  carrier  changes  by  highlighting  carrier  change  information  in  customer  billings.  71 

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

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

 70  Id. 
 71  Second  Report  and  Order,  14  FCC  Rcd  at  1569,    101. 
 72  Florida  Bar  v.  Went  For  It  Inc.,  515  U.  S.  618,  632  (1995). 
 73  U  S  West  v.  FCC,  182  F.  3d  at  1238  (quoting  Cincinnati  v.  Discovery  Network,  Inc.,  507  U.  S.  410,  417  (1993). 
 74  Second  Report  and  Order  at    100. 
 75  Id.  at    97-  101. 
 76  As  noted  above,  Rural  LECs  state  that  their  own  voluntary  executing  carrier  verification  efforts  prevented 
 slamming  in  the  past,  and  that  such  efforts  revealed  that  40-  50%  of  change  requests  were  unauthorized  (Rural  LECs  Petition  at  3-  5).  We  note  that  AT&  T,  Sprint,  and  TRA  question  this  information,  and  assert  that  nearly  half  of  the 

 change  orders  reported  to  be  invalid  did  not  involve  actual  slamming  (AT&  T  Comments  at  10-  11;  TRA  Comments  at  11;  Sprint  comments  at  4).  Sprint  posits  that  the  high  slamming  rates  reported  by  Petitioners  may  also  reflect  the 
 use  of  marketing  efforts  by  LECs  during  re-  verifications  (Sprint  Comments  at  5).  WorldCom  states  that  it  has  uncovered  many  instances  in  which  ILECs  have  attempted  to  retain  customers  under  the  guise  of  verification 
 (WorldCom  Comments  at  5).  AT&  T  asserts  that  only  one  named  member  of  the  Rural  LECs  does  not  provide  or  (continued....) 
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 23.  We  have  considered  alternatives  to  the  re-  verification  restriction,  such  as  allowing  re-verification  by  LECs  without  IXC  affiliates,  or  allowing  re-  verification  by  LECs  if  the  actual  re-verification 
 is  conducted  by  an  independent,  third-  party  verifier.  However,  we  note  that  these  alternatives  would  still  involve  duplicative  verifications  for  customers  as  discussed  above.  In  addition,  even  if  a  LEC 
 or  its  affiliate  does  not  provide  IXC  service,  the  LEC  remains  a  competitor  to  IXC  service  providers  in  the  lucrative  intraLATA  toll  market,  and  as  such  would  have  incentives  to  engage  in  anti-  competitive 
 behavior  towards  IXCs.  Furthermore,  such  alternatives  would  create  administrative  difficulties.  For  example,  if  a  customer  was  required  to  complete  verifications  at  the  behest  of  both  the  IXC  and  the  LEC, 
 and  the  verifications  were  somehow  contradictory,  it  may  not  be  clear  as  to  which  verification  should  be  used  to  effect  the  carrier  change  or  to  make  a  determination  in  the  context  of  a  slamming  dispute.  While 
 we  do  not  agree  with  TRA  that  executing  carrier  verification  is  simply  a  naked  cost  with  no  countervailing  benefit,  we  also  do  not  find  that  potential  benefits  of  allowing  executing  carriers  to  verify 
 sales  by  other  companies  to  the  executing  carriers  customers  outweigh  the  costs  to  consumer  choice  and  competition.  We  note  that  our  rules  require  executing  carriers  (that  are  informed  by  a  subscriber  of  an 
 unauthorized  carrier  change)  to  immediately  notify  both  the  authorized  carrier  and  the  alleged  unauthorized  carrier,  and  to  refer  the  subscriber  to  the  appropriate  governmental  forum  for  resolution  of 
 the  complaint.  77  Under  these  circumstances,  the  LEC,  at  its  discretion,  may  be  able  to  assist  the  subscriber  in  receiving  reimbursement  or  removal  of  the  charges  from  the  bill,  particularly  if  the  LEC  acts 
 as  the  billing  and  collections  agent  for  the  IXC  in  question. 
 24.  With  respect  to  the  petitioners  other  arguments,  we  disagree  with  NTCA  that  the  prohibition  on  executing  carrier  re-  verification  exposes  executing  carriers  to  liability  for  slamming  under  general 

 principals  of  agency  law.  The  Commissions  rules  make  clear  that  the  responsibility  to  verify  a  customers  change  request  before  submitting  it  to  that  customers  executing  carrier  rests  upon  the 
 submitting  carrier.  78  Consequently,  any  liability  that  flows  from  a  submitting  carriers  failure  to  verify  a  customers  change  request  will,  under  the  Commissions  rules,  fall  upon  the  submitting  carrier.  79 
 Executing  carriers  are,  of  course,  liable  for  any  adverse  actions  that  they  may  undertake  during  the 

 (...  continued  from  previous  page)  resell  any  type  of  long  distance  (AT&  T  Comments  at  11).  Sprint  states  that  the  information  cited  by  Rural  LECs 
 appears  to  show  that  relatively  few  LECs  without  IXC  affiliates  incurred  the  added  expense  of  re-  verifying  change  requests,  and  that,  in  any  case,  rural  LECs  without  an  IXC  affiliate  might  attempt  to  dissuade  customers  from 
 changing  IXCs;  for  example,  a  LEC  might  have  a  billing  and  collection  agreement  with  the  customers  current  carrier  but  not  with  the  carrier  requesting  the  change  (Sprint  Comments  at  3,  nt.  1).  Sprint  notes  that  Rural  LECs  do 
 not  propose  to  use  a  third  party  verifier,  and  it  is  thus  likely  that  the  same  LEC  employees  that  conduct  the  verifications  would  also  be  responsible  for  marketing  the  LECs  services  (Sprint  Comments  at  5).  Rural  LECs 
 disagree  that  their  petition  indicates  that  relatively  few  LECs  without  IXC  affiliates  re-  verify  requests,  as  is  alleged  by  Sprint  (Rural  LECs  Reply  at  4).  Rural  LECs  state  that  the  list  of  rural  LECs  that  have  in  the  past  used 
 verification  was  intended  to  be  illustrative  and  not  definitive,  and  note  that  NTCA  reported  that  40%  of  its  members  do  not  have  IXC  affiliates  (id.  at  5).  Rural  LECs  also  state  that  one  of  the  cited  companies  used  verification  forms 
 that  were  mailed  and  not  subject  to  human  error,  i.  e.,  the  kind  of  miscommunication  or  misinterpretation  that  Sprint  alleges  (id.).  Rural  LECs  assert  that  67%  of  those  subscribers  nevertheless  reported  that  their  carrier  change 
 requests  were  invalid  (id.). 
 77  47  C.  F.  R.    64.1150(  a),(  b). 
 78  47  C.  F.  R.    64.1120(  a)(  1)(  ii). 
 79  See  47  C.  F.  R.    64.  1140(  a). 
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 execution  process,  such  as  unnecessary  or  unreasonable  delay  in  implementing  a  change  request  from  a  submitting  carrier.  80 
 25.  Finally,  we  disagree  with  NTCA  that  the  information  contained  in  a  carrier  change  request  is  not  protected  by  section  222(  b)  of  the  Act.  NTCA  argues  that  the  executing  carrier  would  be  using  the 
 proprietary  information  to  prevent  anti-  competitive  practices,  and  not  to  gain  a  competitive  advantage  in  violation  of  section  222(  b).  81  In  contrast,  Cable  &  Wireless  and  Sprint  concur  with  the  Commissions 
 finding  in  the  Second  Report  and  Order  that  the  use  of  carrier  change  information  by  executing  carriers  to  re-  verify  orders  is  an  impermissible  use  of  proprietary  information  under  section  222(  b)  of  the  Act.  82  As 
 explained  above,  the  Commission  has  legitimate  concerns  with  regard  to  LEC  use  of  carrier  change  information  to  impede  consumer  choice  and  hamper  competition.  In  addition,  the  fact  that  an  executing 
 carrier  may  also  use  that  information  in  a  pro-  competitive  way  (i.  e.,  to  prevent  slamming)  does  not  diminish  the  fact  that  information  contained  in  a  carrier  change  request  is  by  its  very  nature  proprietary  to 
 the  submitting  carrier.  Such  information  may  only  be  used  by  the  executing  carrier  to  effectuate  the  provision  of  service  by  the  submitting  carrier  to  its  customer. 

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

 80  47  C.  F.  R.    64.1120(  2).  See  also    82-  91,  infra,  regarding  executing  carrier  liability  in  instances  where  a 
 customer  contacts  a  LEC  directly  to  request  a  carrier  change.  81 
 See  NTCA  Petition  at  9,  16-  17.  See  also  Telecommunications  Carriers'  Use  of  Customer  Proprietary  Network  Information  and  Other  Customer  Information,  Third  Report  and  Order  and  Third  Further  Notice  of  Proposed 

 Rulemaking,  CC  Docket  Nos.  96-  115,  96-  149,  00-  257,  FCC  02-  214,  (rel.  July  25,  2002)  (CPNI  Order)  at    131-  133. 
 82  Cable  &  Wireless  Comments  at  5. 
 83  SBC  Petition  at  13-  14. 
 84  See  NTCA  Petition  at  9,  16  (  NTCA  has  no  quarrel  with  a  conclusion  that  the  statute  proscribes  the  competitive 
 marketing  of  the  LECs  or  any  other  carriers  service  against  the  interests  of  the  submitting  carrier).  As  explained  above,  NTCA  contends  that  executing  carrier  re-  verification  of  change  requests  utilizes  carrier  change  information 

 for  pro-  competitive,  rather  than  anti-  competitive,  purposes.  85 
 NTCA  Petition  at  16.  86 
 SBC  Petition  at  13-  14.  87 
 Id.  at  14.  88 
 WorldCom  Comments  at  17-  18. 
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 27.  We  clarify  that,  to  the  extent  that  the  retail  arm  of  an  executing  carrier  obtains  carrier  change  information  through  its  normal  channels  in  a  form  available  throughout  the  retail  industry,  and  after  the 
 carrier  change  has  been  implemented  (such  as  in  disconnect  reports),  we  do  not  prohibit  the  use  of  that  information  in  executing  carriers  winback  efforts.  This  is  consistent  with  our  finding  in  the  Second 
 Report  and  Order  that  an  executing  carrier  may  rely  on  its  own  information  regarding  carrier  changes  in  winback  marketing  efforts,  so  long  as  the  information  is  not  derived  exclusively  from  its  status  as  an 
 executing  carrier.  89  Under  these  circumstances,  the  potential  for  anti-  competitive  behavior  by  an  executing  carrier  is  curtailed  because  competitors  have  access  to  equivalent  information  for  use  in  their 
 own  marketing  and  winback  operations. 
 28.  We  emphasize  that,  when  engaging  in  such  marketing,  an  executing  carrier  may  only  use  information  that  its  retail  operations  obtain  in  the  normal  course  of  business.  Executing  carriers  may  not 

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

 III.  VERIFICATION  OF  CARRIER  CHANGES 
 A.  Independent  Third  Party  Verification 
 29.  Background.  In  the  Second  Report  and  Order,  the  Commission  stated  that  a  preferred  carrier  change  order  must  be  confirmed  using  written  or  electronically-  signed  letters  of  agency  (LOAs), 

 electronic  authorization  (a  call  to  a  toll-  free  number  that  records  the  callers  originating  automatic  number  identification),  independent  third  party  verification,  or  any  State-  enacted  verification  procedures 
 applicable  to  intrastate  preferred  carrier  change  orders  only.  90  In  particular,  the  Commission  modified  its  rules  on  independent  third  party  verification  to  address  concerns  raised  in  conjunction  with  its  use  by 
 strengthening  the  independence  criteria  under  which  third  party  verification  entities  operate.  91  The  Commission  noted,  for  example,  that  some  carriers  have  used  third  party  verification  in  a  manner 

 89  Second  Report  and  Order,  14  FCC  Rcd  at  1573-  74,    107.  This  is  also  consistent  with  our  findings  regarding 
 winback  in  our  Customer  Proprietary  Network  Information  (  CPNI)  proceeding.  See  Telecommunications  Carriers'  Use  of  Customer  Proprietary  Network  Information  and  Other  Customer  Information,  Third  Report  and 

 Order  and  Third  Further  Notice  of  Proposed  Rulemaking,  CC  Docket  Nos.  96-  115,  96-  149,  00-  257,  FCC  02-  214,  (rel.  July  25,  2002)  (CPNI  Order)([  w]  e  reaffirm  our  existing  rule  that  a  carrier  executing  a  change  for  another 
 carrier  is  prohibited  from  using  such  information  to  attempt  to  change  the  subscriber's  decision  to  switch  to  another  carrier.  However,  because  we  recognize  that  a  carrier's  retail  operations  may,  without  using  information  obtained  in 
 violation  of  section  222(  b),  legitimately  obtain  notice  that  a  customer  plans  to  switch  to  another  carrier  or  contact  a  defecting  customer  in  the  ordinary  course  of  business,  we  decline  to  impose  a  presumption  that  all  retention  efforts 
 are  illegal,  as  requested  by  MCI  WorldCom  .  .  .  we  agree  with  BellSouths  argument  that  deeming  any  "winback  or  retention  effort[  s],  including  those  based  on  information  learned  through  the  carrier's  retail  operations,  .  .  . 
 presumptively  unlawful  would  deprive  customers  of  .  .  .  pro-  consumer,  pro-  competitive  benefits.").  CPNI  Order  at    131-  133. 
 90  Second  Report  and  Order,  14  FCC  Rcd  at  1508. 
 91  Id.  at    33. 
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 calculated  to  confuse  and  mislead  consumers.  92  The  Commission  thus  set  forth  the  criteria  to  be  used  when  determining  third  party  independence  in  order  to  better  ensure  that  the  third  party  verification 
 process  is  truly  separate  from  both  the  carrier  and  the  carriers  sales  representative.  93  Specifically,  the  Commission  (1)  stated  that  the  third  party  verifier  should  not  be  owned,  managed,  controlled,  or  directed 
 by  the  carrier,  (2)  found  that  the  third  party  verifiers  should  not  be  given  financial  incentives  to  approve  carrier  changes,  and  (3)  reiterated  that  the  third  party  verifier  must  operate  in  a  location  physically 
 separate  from  the  carrier.  94  The  Commission  also  recognized  that  additional  revisions  to  the  slamming  rules  could  further  improve  the  preferred  carrier  change  process  and  prevent  unauthorized  changes.  Thus, 
 concurrent  with  the  release  of  the  Second  Report  and  Order,  the  Commission  issued  a  Further  Notice  of  Proposed  Rulemaking  seeking  comment  on  independent  third  party  verification,  as  well  as  on  various 
 other  proposals  relating  to  slamming.  95 
 30.  In  response  to  the  comments  received,  in  the  Third  Report  and  Order  the  Commission  required  that  (1)  the  carrier  or  carriers  sales  representative  must  drop  off  the  call  once  the  connection  has 

 been  established  between  the  subscriber  and  the  third  party  verifier,  (2)  scripts  for  third  party  verification  (TPV)  should  elicit,  at  a  minimum,  the  identity  of  the  subscriber,  confirmation  that  the  person  on  the  call 
 wants  to  make  the  change,  the  names  of  the  carriers  affected  by  the  change,  the  telephone  numbers  to  be  switched,  and  the  types  of  service  involved,  and  the  TPV  must  also  be  conducted  in  the  same  language 
 that  was  used  in  the  underlying  sales  transaction,  (3)  the  entire  TPV  transaction  must  be  recorded,  and  carriers  must  preserve  and  maintain  these  recordings  for  a  minimum  period  of  two  years  after  obtaining 
 such  verification,  and  (4)  automated  systems  that  preserve  the  independence  of  the  third  party  verification  process  may  be  used  to  verify  carrier  change  requests.  96  The  Commission  created  these  requirements  to 
 enhance  the  independent  nature  of  the  third  party  method  of  verification  and  to  ensure  that  the  verification  process  ultimately  involved  only  the  consumer  and  the  third  party  verifier.  The  Commission  also  stated, 
 in  the  Third  Report  and  Order,  that  a  carriers  sales  agents  role  is  concluded  when  a  consumer  is  transferred  to  a  third  party  verifier  because  the  consumers  intent  to  change  carriers  should  have  been 
 reached  following  a  clear,  non-  misleading  presentation  by  the  carriers  sales  agent.  97  The  Commission  found  that  the  presence  of  a  sales  agent  on  the  verification  call  could  compromise  the  independent  nature 
 of  the  process  by  creating  an  opportunity  for  improper  influence.  98 
 31.  VoiceLog,  a  third  party  verification  services  provider,  has  petitioned  the  Commission  to  reconsider  the  requirement  that  a  carrier  or  carriers  sales  representative  drop  off  the  call  after  initiating  a 

 three-  way  conference  call  or  a  call  through  an  automated  verification  system.  99  VoiceLog  states,  among 
 92  Second  Report  and  Order,  14  FCC  Rcd  at  1552. 
 93  Id. 
 94  Id.. 
 95  Id.  at  1601-  1603. 
 96  Third  Report  and  Order,  15  FCC  Rcd  at  21-  24.  Generally,  an  automated  system  operates  in  the  following 
 manner:  after  obtaining  a  carrier  change  request  from  a  subscriber  through  telemarketing,  the  carriers  sales  representative  sets  up  a  three-  way  call  among  the  subscriber,  the  carrier,  and  the  automated  verification  recording 

 system.  The  automated  system  then  plays  recorded  questions  and  records  the  subscribers  answers  to  those  questions.  Id.  at  43,  note  125. 
 97  Third  Report  and  Order,  15  FCC  Rcd  at    38. 
 98  Id. 
 99  See  VoiceLog  Petition  for  Reconsideration  (VoiceLog  Reconsideration  Petition).  VoiceLog  also  asks  that  the 
 Commission  stay  the  drop-  off  rule  pending  reconsideration.  Inasmuch  as  we  address  VoiceLogs  petition  for  reconsideration  of  the  Third  Report  and  Order,  the  petition  for  partial  stay  pending  reconsideration  is  denied  as 

 moot.  See  VoiceLog  Stay  Petition. 
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 other  things,  that  many  of  the  smaller  carriers  it  serves  do  not  have  the  sophisticated  central  office  equipment  necessary  to  allow  a  sales  representative  to  initiate  a  three-  way  conference  call  or  call  through 
 an  automated  system  and  then  drop  off  the  line.  100 
 32.  Specifically,  VoiceLog  asserts  that,  when  adopting  the  drop-  off  rule,  the  Commission  failed  to  give  full  consideration  to  the  rules  effect  on  consumers  and,  in  particular,  small  carriers.  VoiceLog 

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

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

 34.  Furthermore,  VoiceLog  and  other  commenters  state  that  customers  sometimes  have  questions  that  occur  to  them  during  the  verification  process.  107  VoiceLog  asks  that  the  Commission  modify  the 
 drop-  off  requirement  to  allow  a  carrier  or  a  carriers  representative  initiating  a  three-  way  conference  call  or  a  call  through  an  automated  verification  system  to  remain  silently  on  the  line,  assist  the  subscriber  in 
 reaching  a  live  person,  assist  in  terminating  the  call,  and  provide  neutral,  objective  information  that 

 100  VoiceLog  Reconsideration  Petition  at  5.  Several  comments  were  filed  in  support  of  the  VoiceLog  petitions;  see 
 Comments  of  AT&  T,  BuyersOnline,  Cox  Communications,  ErbiaNetwork,  Fionda,  Hughes  Telecom,  IDS  Telecom,  John  Ring  Enterprises,  Long  Distance  Post,  PromiseVision,  SaveTel  Communications,  SBA,  Telephone  Company 

 of  Central  Florida,  TCM  Communications,  Telecom  New  Zealand,  and  Velocity  Networks  of  Kentucky.  101 
 VoiceLog  states  that  it  provides  TPV  services  to  approximately  200  carriers,  the  majority  of  which  are  smaller  carriers.  See  VoiceLog  Stay  Petition. 

 102  Impact  of  Representative  Drop  Off  Rule,  A  Survey  by  VoiceLog,  LLC  (VoiceLog  Survey). 
 103  VoiceLog  Survey  at  2-  4. 
 104  Id.  at  5. 
 105  VoiceLog  Reconsideration  Petition  at  5.  See  VoiceLog  Survey  at  4. 
 106  VoiceLog  Survey  at  5. 
 107  See,  e.  g.,  AT&  T  Comments  at  11. 
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 responds  directly  to  the  subscribers  inquiry.  108  VoiceLog  states  that  permitting  a  sales  agent  to  stay  on  the  line  allows  a  consumer  who  becomes  confused  to  be  able  terminate  the  verification,  obtain  the 
 needed  clarification  or  information  from  the  sales  agent,  and  then  initiate  a  new  verification.  109  VoiceLog  asserts  that  its  proposal  addresses  concerns  regarding  potentially  coercive  behavior  by  the  sales 
 agent  during  the  verification  process,  is  practical  to  implement,  and  is  easy  to  enforce.  110 
 35.  Discussion.  We  concluded  in  the  Third  Report  and  Order  that  the  drop-  off  requirement  would  act  as  an  important  tool  to  better  ensure  that  the  third  party  verification  process  is  truly  separate 

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

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

 general  arguments  with  respect  to  the  overall  effect  of  the  rule,  and  proposes  more  extensive  modifications,  we  address  these  arguments  below. 

 108  VoiceLog  Reconsideration  Petition  at  9. 
 109  Stay  Petition  at  5.  In  its  Stay  Petition,  VoiceLog  asks  that  a  carriers  sales  agent  be  allowed  to  remain  on  the  line 
 during  the  verification  process,  but  states  that  verification  would  cease  if  the  customer  needed  further  assistance  from  the  sales  agent.  In  its  Reconsideration  Petition,  VoiceLog  asks  that  the  Commission  permit  the  sales  agent  to 

 participate  in  the  verification  process  by  providing  neutral  assistance  to  the  consumer  if  needed.  110 
 VoiceLog  Reconsideration  Petition  at  10.  111 
 Third  Report  and  Order,  15  FCC  Rcd  at    38.  112 
 Such  certification  must  include  a  signed  affidavit  testifying  as  to  the  carriers  inability  to  comply.  113 
 Third  Report  and  Order,  15  FCC  Rcd  at    51. 
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 38.  Alleged  Drop-  off  Rule  Deficiencies.  VoiceLog  argues  that  the  rule  imposes  burdens  on  the  verification  process,  impedes  competition  and  will  increase  consumer  confusion.  114  According  to 
 VoiceLog,  the  rule  is  overbroad  because  the  presence  of  a  sales  agent  during  third  party  verification  is  not  per  se  misleading  or  coercive;  a  sales  agent  that  is  allowed  to  remain  silently  on  the  line  except  to  provide 
 neutral,  factual  information  would  not  have  the  opportunity  to  exert  undue  influence  on  the  customer.  115  VoiceLog  further  asserts  that  consumers  may  be  confused  by  automated  verification  systems  or  have 
 additional  questions  regarding  a  carriers  service.  116  Thus,  VoiceLog  states,  the  drop-  off  rule  imposes  burdens  on  the  verification  process  by  causing  unnecessary  delays  as  a  result  of  having  to  repeat  the 
 verification  process,  as  opposed  to  allowing  the  sales  representative  to  provide  neutral,  factual  assistance  during  verification.  117  VoiceLog  asserts  that  because  these  problems  do  not  exist  with  LOAs,  the  drop  off 
 rule  provides  an  incentive  for  carriers  that  can  afford  it  to  switch  from  third  party  verification  to  LOAs.  118 
 39.  AT&  T  asserts  that  it  has  been  its  experience  that  verification  end  users  request  marketing-related  information,  and  that  the  drop-  off  rule  thereby  forces  the  consumer  to  either  forgo  obtaining  the 

 information  or  terminate  the  verification  call  and  place  a  new  call  to  the  carriers  telemarketing  center  in  order  to  speak  to  the  same  carrier  representative.  119  In  addition,  AT&  T  states  that  carriers  that  offer 
 presubscribed  service  bundled  with  other  services  that  do  not  require  verification  risk  having  the  entire  bundled  order  invalidated  if  the  customer  fails  to  complete  the  verification  process.  120 

 40.  We  are  not  persuaded  that  we  need  to  modify  our  finding  that  a  third  party  verification  is  valid  only  if  it  is  commenced  after  a  carriers  sales  representative  has  finished  providing  information  to 
 the  customer.  We  agree  with  ASCENT  that  there  should  be  no  reason  for  a  sales  agent  to  participate  in  the  call  after  it  has  been  transferred  to  an  independent  third  party  verifier;  at  this  stage,  the  consumer  will 
 have  manifestly  exhibited  a  clear  intent  to  effectuate  a  carrier  change,  and  will  have  reached  that  conclusion  following  a  non-  misleading  presentation  by  the  sales  representative.  121  If  a  consumer  needs  to 
 obtain  additional  information,  the  third  party  verification  must  be  terminated,  and  a  new  verification  may  commence  only  after  the  carriers  sales  agent  has  finished  responding  to  the  consumers  inquiry.  We 
 emphasize  that  we  do  not  forbid  carriers  sales  agents  from  speaking  to  a  consumer  after  a  verification  attempt  has  commenced.  Final  verification,  however,  can  only  be  validly  obtained  after  sales  agents  have 
 finished  providing  information. 
 41.  We  note  that  VoiceLog  and  AT&  T  assert  that  requiring  a  sales  agent  to  be  silent  during  verification  achieves  the  desired  result  of  avoiding  undue  influence  by  the  agent  without  creating  the 

 problems  they  claim  are  associated  with  the  drop-  off  rule.  122  AT&  T  states  that  it  is  not  apparent  how  the  telemarketing  personnel  could  exercise  any  such  improper  influence  unless  they  were  to  take  a  speaking 
 role  in  the  three  way  call.  123  However,  both  parties  also  advocate  that  the  sales  agent  not  remain  silent 
 114  VoiceLog  Reconsideration  Petition  at  4-  9. 
 115  Id.  at  5. 
 116  Id.  at  7. 
 117  Id. 
 118  Id.  at  8. 
 119  AT&  T  Comments  at  11-  12. 
 120  Id.  at  13. 
 121  Association  of  Communications  Enterprises  (ASCENT)  Comments  at  12. 
 122  AT&  T  Comments  at  10;  VoiceLog  Reconsideration  Petition  at  5. 
 123  AT&  T  Comments  at  10,  note  22  (emphasis  added). 
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 so  that  the  agent  may  provide  information  in  response  to  consumer  questions  before  verification  is  completed.  124  We  disagree  with  AT&  T  that  marketing-  related  information  should  be  provided  by  the 
 carriers  sales  agent  during  verification.  125  As  the  Commission  noted  in  the  Third  Report  and  Order,  [  b]  ecause  the  carriers  sales  representative  is  usually  compensated  for  sales  completed,  and  not  for  sales 
 attempts,  the  sales  representative  could  not  be  considered  an  unbiased  third  party  that  lacks  motivation  to  influence  the  outcome  of  the  verification  process.  126  It  is  difficult  to  imagine  how  any  verification 
 obtained  before  marketing  has  ceased  can  be  considered  representative  of  a  consumers  final  decision;  such  a  practice  would  blur  the  line  between  marketing  and  verification  to  the  extent  that  the  concept  of 
 independent  verification  would  be  rendered  virtually  meaningless. 
 42.  As  noted  above,  VoiceLog  asserts  that  the  rule  is  impractical  because  many  smaller  carriers  lack  access  to  the  technical  means  to  comply  with  the  requirement  or  cannot  afford  expensive  equipment 

 upgrades.  127  We  have  addressed  VoiceLogs  concerns  in  this  respect  by  creating  an  exemption  for  those  carriers  that  certify  that  they  are  unable  to  comply  with  the  rule.  In  addition,  VoiceLog  states  that  the  rule 
 is  not  competitively  neutral  with  respect  to  other  verification  methods,  such  as  LOAs.  128  VoiceLog  asserts  that  because  the  burdens  on  the  verification  process  associated  with  the  drop  off  rule  do  not  exist 
 with  LOAs,  the  rule  provides  an  incentive  for  carriers  that  can  afford  it  to  switch  from  three-  way  calling  and  associated  third  party  verification  to  LOAs  obtained  by  face-  to-  face  conversations.  129  VoiceLog 
 states  that  smaller  carriers,  however,  cannot  afford  these  additional  costs.  130  Again,  we  note  that  we  now  allow  carriers  to  certify  that  they  are  unable  to  comply  with  the  drop-  off  rule.  In  any  case,  we  do  not 
 believe  that  the  rule  arbitrarily  discriminates  against  three-  way  calling  and  associated  third  party  verifications  as  opposed  to  LOAs  obtained  by  sales  agents  face-  to-  face.  We  note  that  we  have  found  that 
 some  carriers  use  misleading  telemarketing  to  induce  subscribers  to  change  carriers  by,  for  example,  telling  them  that  their  long  distance  and  local  bills  will  be  consolidated.  131  The  third  party  verifiers  then 
 close  the  deal  for  the  slamming  carriers  by  assuring  the  consumers  that  they  have  merely  authorized  billing  consolidation,  rather  than  any  carrier  changes.  132  A  subscriber  may  be  more  easily  misled  in  the 
 telemarketing  situation  than  in  a  face-  to-  face  meeting.  In  a  face-  to-  face  meeting,  the  subscriber  is  able  to  physically  review  the  critical  aspects  of  the  calling  plan  and  determine  if  any  mistakes  were  made  with 
 regard  to  the  ordered  services. 
 43.  Alleged  Commission  failure  to  consider  the  entire  record  when  deciding  on  the  drop-  off  rule.  VoiceLog  argues  that  several  commenters  suggested  that  the  Commission  adopt  a  requirement  similar  to 

 that  which  is  proposed  by  VoiceLog.  133  In  adopting  the  drop-  off  rule,  the  Commission  considered  all  proposals  offered  in  the  comments,  including  a  proposal  from  the  National  Association  of  Attorneys 
 General  (NAAG),  which  suggested  that  the  Commission  take  an  even  harder  stance  to  ensure  the  independence  of  the  third  party  verification,  by  not  allowing  a  carrier  to  conduct  a  three-  way  call  to 

 124  AT&  T  Comments  at  11-  12;  VoiceLog  Petition  at  4-  5,  7-  8. 
 125  AT&  T  Comments  at  11-  12. 
 126  Third  Report  and  Order  at    45. 
 127  VoiceLog  Reconsideration  Petition  at  5,  8. 
 128  Id.  at  6. 
 129  Id.  at  8. 
 130  Id. 
 131  Third  Report  and  Order,  15  FCC  Rcd  at  19,  note  102. 
 132  Third  Report  and  Order,  15  FCC  Rcd  at  19,  note  102. 
 133  VoiceLog  Reconsideration  Petition  at  11. 
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 connect  the  subscriber  to  the  third  party  verifier.  134  The  Commission  also  considered  the  comments  of  ASCENT  who  argued  that  the  carriers  sales  representatives  role  is  concluded  by  the  point  at  which  the 
 consumer  is  transferred  to  a  third  party  verifier  and  there  should  be  no  reason  for  the  carries  sales  representative  to  participate  in  a  call  after  it  has  been  transferred  to  an  independent  third  party  verifier.  135 
 These  examples  demonstrate  that  the  record  provided  a  reasonable  basis  for  the  Commissions  initial  decision.  By  allowing  carriers  to  certify  that  they  are  unable  to  comply  with  the  rule,  the  Commission 
 will  not  force  those  carriers  to  choose  between  abandoning  the  use  of  the  three-  way  call  to  link  the  subscriber  with  the  automated  TPV  system  or  investing  in  infeasible  upgrades.  136 

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

 the  Commission  asked  whether,  if  a  telemarketing  carrier  is  present  during  the  third  party  verification,  such  verification  can  be  considered  independent  and  asked  whether  independent  third  party 
 verification  should  be  separated  completely  from  the  sales  transaction,  so  that  a  carrier  would  not  be  permitted  to  conduct  a  three-  way  call  to  connect  the  subscriber  to  the  third  party  verifier.  140  The 
 Commission  also  stated:  With  some  [automated  third  party  verification]  systems,  the  telemarketing  carrier  remains  on  the  call  during  the  verification,  while  in  other  systems,  the  telemarketing  carrier  may 
 hang  up  on  the  call  after  connecting  the  subscriber  to  the  third  party  verifier.  We  seek  comment  on  whether  automated  third  party  verification  systems  as  described  above  would  comply  with  our  rules 
 concerning  independent  third  party  verification,  as  well  as  with  the  intent  behind  our  rules  to  produce  evidence  independent  of  the  telemarketing  carrier  that  a  subscriber  wishes  to  change  his  or  her  carrier.  141 
 Therefore,  while  we  did  not  mention  the  drop-  off  rule  by  that  name,  the  Commission  did  seek  comment  on  the  fundamental  aspects  of  the  rule.  In  addition,  in  the  IRFA,  the  Commission  recognized  that  while  it 

 134  Second  Report  and  Order,  14  FCC  Rcd  at  1601,    166. 
 135  ASCENT  Comments  at  12. 
 136  Those  methods  include  written  or  electronically-  signed  LOAs,  electronic  authorization,  other  forms  of 
 independent  third  party  verification,  and  any  State-  enacted  verification  procedures  applicable  to  intrastate  preferred  carrier  change  orders.  See  47  C.  F.  R.    64.  1120(  c). 

 137  U.  S.  Small  Business  Administration  Ex  Parte,  filed  May  3,  2001  (SBA  Ex  Parte). 
 138  See  SBA  Ex  Parte  at  1. 
 139  Id.  at  1,  4. 
 140  Second  Report  and  Order,  14  FCC  Rcd  at  1601,    166. 
 141  Id.. 
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 did  not  propose  specific  rules  for  modification  of  the  third  party  verification  process,  it  sought  comment  generally  on  the  form  and  content  of  the  independent  third  party  verification.  142  Furthermore,  in  the 
 FRFA,  the  Commission  recognized  the  drop-  off  requirement  when  summarizing  projected  compliance  requirements.  143  Finally,  we  note  that  carriers  (including  small  carrier  entities)  that  certify  that  they  are 
 unable  to  comply,  will  not  be  subject  to  the  rule.  Thus,  we  believe  that  parties  regulatory  flexibility  concerns  are  addressed  by  the  action  we  take  here  today.  In  addition,  our  action  regarding  the  drop-  off 
 rule  is  discussed  in  the  Supplemental  Regulatory  Flexibility  Analysis  herein. 
 46.  First  Amendment  Concerns.  Lastly,  VoiceLog  argues  that  the  Commissions  drop-  off  requirement  is  an  unconstitutional  abridgement  of  the  First  Amendment  right  of  free  speech  under  the 

 Central  Hudson  test  for  permissible  regulation  of  commercial  speech.  144  As  discussed  in  paragraph  16  supra,  in  Central  Hudson,  the  Supreme  Court  articulated  an  analysis  for  determining  whether  a  particular 
 commercial  speech  regulation  is  constitutionally  permissible.  145  While  we  are  not  convinced  that  VoiceLogs  concerns  raise  a  First  Amendment  issue,  we  nevertheless  address  VoiceLogs  assertions 
 below. 
 47.  VoiceLog  argues  that  the  drop-  off  requirement  fails  constitutional  scrutiny  under  the  Central  Hudson  analysis  because  the  rule  halts  all  speech  in  order  to  curtail  some  problematic  speech.  146 

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

 48.  Consistent  with  our  rules,  any  neutral,  factual  information  that  is  provided  by  a  third  party  verifier  should  not  mirror  the  carriers  particular  marketing  pitch,  nor  should  it  market  the  carriers 

 142  Second  Report  and  Order  at    229,  14  FCC  Rcd  1628. 
 143  Third  Report  and  Order  at    112. 
 144  VoiceLog  Ex  Parte  at  3.  See  also  VoiceLog  joint  letters  with  Capsule  Communications,  Clear  World 
 Communications,  Plan  B  Communications,  TransWorld  Network,  Corp.,  and  AT&  T  Corp.  145 
 Central  Hudson  Gas  &  Elec.  Corp.  v.  Public  Service  Commn  of  N.  Y.,  447  U.  S.  at  557  (1980)  (Central  Hudson).  See  discussion  of  Central  Hudson  in  section  II.  C,  supra. 

 146  VoiceLog  Ex  Parte  at  3. 
 147  Id.  (quoting  Lorillard  Tobacco  Co.  v.  Reilly). 
 148  Id. 
 149  AT&  T  Comments  at  11-  12. 
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 services  or  be  an  extension  of  the  sales  call.  Instead,  it  should  clearly  verify  the  subscribers  decision  to  change  carriers.  150  Commission  rules  also  require  the  verification  process  (i.  e.,  everything  the  subscriber 
 says  and  hears  during  the  verification  call)  to  be  taped  and  preserved  for  a  period  of  two  years  in  order  to  ensure  the  availability  of  a  complete  and  accurate  record  for  investigation  of  any  slamming  complaint.  If 
 a  carrier  does  not  comply  with  the  rule  the  verification  is  invalid.  We  will  continue  to  review  third  party  verification  recordings  when  evaluating  slamming  complaints  and  will  aggressively  enforce  our  liability 
 rules. 
 B.  60-  Day  Limit  on  the  Effectiveness  of  an  LOA 
 49.  Background.  In  the  Third  Report  and  Order,  the  Commission  found  that  a  reasonable  limitation  on  the  amount  of  time  an  LOA  should  be  considered  valid  is  60  days.  151  The  Commission 

 concluded  that  the  60-  day  limit  applies  to  submitting  carriers  rather  than  executing  carriers,  because  a  submitting  carrier  is  an  actual  party  to  the  contractual  agreement  with  the  customer  and,  as  such,  is  more 
 capable  of  conforming  its  behavior  to  the  obligation.  152 
 50.  Discussion.  AT&  T  asks  that  the  Commission  modify  its  rule  to  exempt  multi-  line  and/  or  multi-  location  business  customers  from  the  60-  day  limit.  153  According  to  AT&  T,  large  business 

 customers  typically  execute  LOAs  authorizing  their  preferred  carrier  to  pre-  subscribe  many  or  all  of  the  customers  existing  and  newly  added  lines  to  the  designated  carrier.  154  However,  many  of  these 
 installations  may  occur  months  or  even  years  after  the  LOA  has  been  executed.  155  Thus,  the  60-  day  limit  on  the  effectiveness  of  LOAs  will  needlessly  burden  such  subscribers  and  their  carriers  that  must 
 continually  update  those  documents  in  order  to  maintain  their  validity.  156  AT&  T  also  asks  the  Commission  to  clarify  that  a  carrier  change  order  submitted  to  an  executing  carrier  within  the  60-  day 
 effectiveness  period  should  be  considered  timely,  notwithstanding  the  need  for  subsequent  activities  such  as  lifting  a  carrier  freeze.  157  ASCENT,  Sprint,  and  WorldCom  agree  with  AT&  T  that  application  of 
 the  60-  day  limit  to  businesses  is  inconvenient,  wastes  resources,  and  conveys  no  consumer  protection  benefits.  158 

 51.  SBC,  however,  sees  no  need  to  modify  the  60-  day  period  for  LOAs.  According  to  SBC,  the  rule  only  requires  a  carrier  to  submit  a  carrier  change  order  within  60  days  of  the  execution  date  of  the 
 LOA;  the  rule  does  not  require  the  executing  carrier  to  fully  execute  the  change  within  60  days.  159  In  addition,  SBC  states  that,  if  the  Commission  were  to  exempt  large  business  customers  from  the  rule,  SBC 
 would  have  to  make  major  modifications  to  its  mechanized  systems  in  order  to  distinguish  residential 

 150  Second  Report  and  Order,  14  FCC  Rcd  at  1553,    72. 
 151  47  U.  S.  C.    64.  1130(  j). 
 152  Third  Report  and  Order  at    80. 
 153  AT&  T  Petition  at  2-  4. 
 154  Id.  at  3. 
 155  Id. 
 156  Id.  at  4. 
 157  AT&  T  Petition  at  note  4. 
 158  ASCENT  Comments  at  5-  6;  Sprint  Comments  at  2;  WorldCom  Comments  at  6-  7. 
 159  SBC  Opposition  at  1-  3.  While  SBC  is  correct  that  the  rule  only  applies  to  the  submission  of  LOAs,  we  caution 
 that  our  rules  require  executing  carriers  to  effect  prompt  execution,  without  any  unreasonable  delay,  of  changes  that  have  been  verified  by  a  submitting  carrier.  See  47  C.  F.  R.    64.  1120. 
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 and  small  business  customer  change  orders  from  large  multi-  line  and/  or  multi-  location  business  customers.  160  SBC  suggests  that,  if  the  Commission  were  to  act  to  modify  the  60-  day  rule,  it  should  do 
 so  uniformly  for  all  customers.  161  AT&  T  replies  that  a  carrier  cannot  submit  a  presubscription  order  to  a  LEC  without  knowing  the  telephone  line  numbers  for  the  order,  and  that  the  carrier  would  not  know  these 
 numbers  if  a  large  business  customer  does  not  establish  a  new  location,  or  add  new  lines,  until  after  the  60-  day  period.  162  AT&  T  also  states  that  SBC  fails  to  identify  the  costs  of  the  modifications  that  SBC 
 asserts  will  be  necessary  under  the  exemption  AT&  T  proposes,  or  why  major  modifications  are  necessary  given  the  current  ability  of  LECs  such  as  SBC  to  identify  such  customers  for  other  purposes.  163 

 52.  We  disagree  with  AT&  T  that  carrier  change  orders  submitted  to  an  executing  carrier  within  the  60-  day  effectiveness  period  should  be  considered  timely,  notwithstanding  the  need  for  subsequent 
 activities  such  as  lifting  a  carrier  freeze.  When  adopting  the  60-  day  period  (as  opposed  to  a  shorter  period),  the  Commission  recognized  that  while  a  preferred  carrier  freeze  can  be  lifted  in  as  few  as  24  or 
 48  hours,  a  subscriber  may  be  out  of  town  or  otherwise  unable  to  be  reached  immediately.  164  The  Commission  found  that  a  60-  day  limitation  permits  more  flexibility  under  these  and  other 
 circumstances.  165  Because  it  is  clear  that  the  Commission  factored  subsequent  activities,  such  as  lifting  a  carrier  freeze,  into  its  decision  to  adopt  a  60-  day  limit,  we  decline  to  clarify,  as  AT&  T  requests,  that 
 such  activities  effectively  toll  the  60-  day  period.  We  continue  to  believe  that,  a  period  of  validity  exceeding  60  days  may  cause  confusion  for  customers  regarding  change  requests  they  may  have  made  but 
 no  longer  remember.  166 
 53.  We  recognize,  however,  that  these  concerns  are  likely  not  present  in  the  case  of  multi-  line  and/  or  multi-  location  business  customers  that  have  entered  into  negotiated  agreements  with  carriers  to  add 

 presubscribed  lines  to  their  business  locations  during  the  course  of  a  term  agreement.  We  agree  with  AT&  T  that  such  a  limitation  would  needlessly  invalidate  these  negotiated  LOAs  and  would  not  confer 
 additional  consumer  protection  benefits  upon  the  parties.  In  addition,  SBC  has  not  adequately  demonstrated  why  there  is  significant  hardship  associated  with  the  identification  of  such  customers.  167 
 Accordingly,  upon  reconsideration,  we  will  no  longer  limit  the  effectiveness  of  such  customers  LOAs  to  60  days. 

 C.  Identification  of  the  Subscribers  Current  Telecommunications  Provider 
 54.  Background.  In  the  Third  Report  and  Order,  the  Commission  concluded  that  a  script  for  third  party  verification  should  elicit,  at  a  minimum,  the  identity  of  the  subscriber;  confirmation  that  the 

 person  on  the  call  is  authorized  to  make  the  carrier  change;  confirmation  that  the  person  on  the  call  wants  to  make  the  change;  the  names  of  the  carriers  affected  by  the  change;  the  telephone  numbers  to  be 

 160  Id.  at  2-  3. 
 161  Id.  at  3. 
 162  AT&  T  Reply  at  2-  3. 
 163  Id. 
 164  Third  Report  and  Order  at    81. 
 165  Id. 
 166  Id. 
 167  AT&  T  Reply  at  2-  3. 
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 switched;  and  the  types  of  service  involved  (i.  e.,  local,  in-  state  toll,  out-  of-  state  toll,  or  international  service).  168 
 55.  Discussion.  AT&  T  asks  the  Commission  to  eliminate  the  requirement  that  independent  third  party  verifications  elicit  from  the  customer  the  identity  of  the  customers  current  telecommunications 
 provider.  169  AT&  T  states  that  the  sole  relevant  consideration  in  executing  a  change  order  is  identification  of  the  carrier  to  whose  service  the  change  is  being  authorized,  not  the  identity  of  the  carrier  being 
 displaced.  170  AT&  T  asserts  that  requiring  carriers  to  compile  and  provide  the  identity  of  the  customers  current  carrier  is  disruptive,  superfluous  and  burdensome.  171  According  to  AT&  T,  many  customers  do 
 not  know  or  understand  the  identity  of  the  carrier  that  provides  their  presubscribed  telecommunications  service  and  those  that  do  might  not  be  willing  to  provide  such  information  to  another  carrier.  172 
 Therefore,  this  requirement  would  inevitably  result  in  the  provision  by  submitting  carriers  of  inaccurate  information  to  executing  carriers.  173  AT&  T  also  notes  that  the  Commission  does  not  require  the  inclusion 
 of  this  information  in  LOAs.  174 
 56.  Qwest,  Sprint,  Verizon,  and  WorldCom  agree  with  AT&  T  that  the  identity  of  the  displaced  carrier  should  not  be  a  required  element  of  an  independent  third  party  verification.  175  However,  these 

 commenters  assert  that  such  identification  is  not  required  by  the  Commissions  rules.  176  Commenters  note  that  the  well  established,  long-  standing  rules  for  LOAs  do  not  contain  such  a  requirement,  and  that 
 the  Commission  specified  in  the  Third  Report  and  Order  that  the  content  requirements  it  adopted  do  not  differ  in  substance  from  our  rules  regarding  LOAs.  177  Accordingly,  commenters  state  the  the  names  of 
 the  carriers  affected  by  the  change,  should  be  read  as  referring  to  the  executing  and  submitting  carriers,  and  not  to  the  displaced  carrier.  178 

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

 168  Third  Report  and  Order  at    40. 
 169  AT&  T  Petition  at  4-  7. 
 170  Id.  at  5. 
 171  Id.  at  5-  6. 
 172  Id. 
 173  Id.  at  6. 
 174  Id. 
 175  Qwest  Comments  at  3-  4;  Sprint  Comments  at  3-  4;  Verizon  Comments  at  2-  3;  WorldCom  Comments  at  3-  6. 
 176  Id. 
 177  Id. 
 178  See,  e.  g.,  Verizon  Comments  at  3. 
 179  AT&  T  Petition  at  note  6. 
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 D.  Effecting  Freeze  Lifts  and  Change  Requests  in  the  Same  Three-  Way  Call 
 58.  AT&  T  asks  the  Commission  to  require  executing  carriers  to  lift  freezes  and  to  process  carrier  change  requests  in  the  same  three-  way  call.  180  AT&  T  notes  that  the  Commission  in  the  Third  Report  and 

 Order  acknowledged  that  lifting  a  preferred  carrier  freeze  and  switching  the  customer  to  the  new  preferred  carrier  in  the  same  three-  way  transaction  would  be  an  efficient  means  of  effectuating  a 
 consumers  carrier  change  request,  yet  declined  to  require  this  of  LECs.  181  According  to  AT&  T,  a  LEC  could  have  no  legitimate  basis  for  objecting  to  combining  these  transactions  in  a  single  call,  as  it  would 
 serve  to  reduce  the  time  and  cost  of  implementing  customers  carrier  changes.  182  Furthermore,  requiring  LECs  to  perform  both  transactions  in  the  same  call  would  improve  the  convenience  of  the  three-  way 
 calling  procedure  for  consumers.  183 
 59.  SBC  states  that  the  Commissions  existing  rules  offer  subscribers  a  simple,  understandable,  but  secure  way  of  lifting  preferred  carrier  freezes  in  a  timely  manner.  184  SBC  and  Verizon  do  not  oppose 

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

 180  Id.  at  7-  9.  See  also  MCI  Comments  at  8;  ASCENT  Comments  at  9. 
 181  Id.  at  8. 
 182  Id.  at  8-  9.  See  also  ASCENT  Comments  at  9  ([  AT&  Ts  suggested]  procedure  will  not  add  appreciably  to  the 
 burdens  of  any  carrier).  183 
 Id.  184 
 SBC  Opposition  at  3-  4.  185 
 Id;  see  also  Verizon  Comments  at  1-  2.  186 
 SBC  Opposition  at  3-  4.  187 
 Id.  188 
 Verizon  Comments  at  1-  2.  189 
 Id.  190 
 Id.  191 
 Id.  192 
 AT&  T  Reply  at  6-  7. 
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 60.  We  agree  that  AT&  T  fails  to  raise  any  arguments  that  were  not  thoroughly  considered  in  previous  orders  in  this  proceeding.  In  the  Second  Report  and  Order,  the  Commission  declined  to 
 enumerate  all  acceptable  procedures  for  lifting  preferred  carrier  freezes.  Rather,  parties  were  encouraged  to  develop  other  methods  of  accurately  confirming  a  subscriber's  identity  and  intent  to  lift  preferred 
 carrier  freezes,  in  addition  to  offering  written  and  oral  authorization.  193  In  the  Third  Report  and  Order,  the  Commission  stated  that  its  rules  do  not  .  .  .  prohibit  LECs  from  requiring  submitting  carriers  to  use 
 separate  methods  for  lifting  a  preferred  carrier  freeze  and  submitting  a  carrier  change  request.  194  We  are  not  persuaded  by  AT&  T  that,  because  a  LEC  in  some  cases  handles  preferred  carrier  change  requests  or 
 carrier  freeze  lifts  using  manual  processes,  it  is  not  therefore  appreciably  more  burdensome  to  handle  every  such  request  in  this  manner,  including  when  a  carrier  freeze  request  is  accompanied  by  a  carrier 
 change  order.  We  note  that,  in  the  Third  Report  and  Order,  when  considering  a  request  virtually  identical  to  AT&  Ts,  the  Commission  specified  that  a  carrier  concerned  about  delays  it  believes  are  attributable  to 
 a  LEC  refusing  to  accept  a  properly  verified  carrier  change  order  (during  the  same  three-  way  call  initiated  for  the  purpose  of  lifting  a  freeze)  may  file  a  complaint  in  the  appropriate  forum. 

 E.  Registration  Requirement 
 61.  In  the  Third  Report  and  Order,  the  Commission  adopted  a  requirement  that  all  new  and  existing  common  carriers  providing  interexchange  telecommunications  service  must  register  with  the 

 Commission.  195  The  Commission  further  concluded  that  facilities-  based  carriers  shall  have  an  affirmative  duty  to  ascertain  whether  a  potential  carrier-  customer  (i.  e.,  a  reseller)  has  filed  a  registration 
 with  the  Commission  prior  to  providing  that  carrier-  customer  with  service.  196  In  situations  where  a  facilities-  based  carrier  was  already  providing  a  reseller  with  service,  the  Commission  directed  the  reseller 
 to  notify  its  underlying  facilities-  based  carrier  that  it  had  submitted  the  registration  information  to  the  Commission,  within  a  week  of  having  done  so.  197  The  Commission  noted  that  a  facilities-  based  carrier 
 would  not  be  responsible  for  the  accuracy  of  the  registration  provided  to  the  Commission  by  its  potential  carrier-  customer,  nor  would  such  a  carrier,  relying  in  good  faith  on  the  absence  of  such  registration,  be 
 liable  under  section  251  of  the  Act  for  withholding  service  from  the  unregistered  entity.  198  The  Commission  held  that  it  might,  however,  after  giving  appropriate  notice  and  opportunity  to  respond, 
 impose  a  fine  on  carriers  that  failed  to  determine  the  registration  status  of  other  carriers  before  providing  them  with  service.  199 

 62.  WorldCom  asks  that  Commission  to  clarify  that  underlying  carriers  are  not  under  a  duty  to  take  any  action  with  regard  to  carrier-  resellers  if:  (1)  the  underlying  carrier  does  not  receive  a 
 notification  of  registration  from  an  existing  carrier-  customer,  and/  or  (2)  the  underlying  carriers  existing  carrier-  customer  does  not  appear  on  the  list  maintained  by  the  Commission.  200  WorldCom 
 states  that  the  Commission  in  the  Third  Report  and  Order  appears  to  distinguish  new  carrier-  reseller  relationships  from  existing  ones,  and  that  this  is  the  best  policy  outcome.  Specifically,  requiring 
 underlying  carriers  to  police  relationships  that  existed  prior  to  the  requirement  would,  according  to 
 193  Second  Report  and  Order,  14  FCC  Rcd  at  1564,    130. 
 194  Third  Report  and  Order  at    74 
 195  Id.  at    62. 
 196  Id.  at    65  (emphasis  in  original). 
 197  Id. 
 198  Id.  at    66. 
 199  Id. 
 200  WorldCom  Petition  at  9-  10. 
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 WorldCom,  expose  the  parties  to  risks  that  were  not  contemplated  during  negotiations  leading  to  the  creation  of  the  reseller  arrangement,  and  would  raise  the  carriers  cost  to  serve  the  entire  reseller  base.  201 
 63.  ASCENT  agrees  that  the  Commissions  requirements  apply  only  on  a  forward-  looking  basis,  and  not  to  existing  carrier-  customers.  202  ASCENT  asserts  that  nothing  in  the  Third  Report  and  Order 
 suggests  that  an  underlying  carrier,  which  by  industry  practice  will  have  already  ascertained  that  its  carrier-  customer  is  authorized  to  provide  interstate,  interexchange  service  pursuant  to  Section  214  before 
 entering  into  a  contractual  relationship  with  that  carrier,  is  in  any  way  authorized  to  abrogate  such  contractual  relationship  in  reliance  on  the  registration  requirement  recently  established  in  the  Third 
 Report  and  Order.  203  ASCENT  suggests  that  any  Commission  clarification  specify  that  an  underlying  carrier  has  no  authority  to  act  to  deny  service  under  existing  service  arrangements  if  it  does  not  receive 
 registration  notification  from  existing  carrier-  customers.  204 
 64.  We  believe  that  the  Third  Report  and  Order  is  sufficiently  clear  with  respect  to  the  registration  requirements,  and  we  decline  to  provide  the  clarification  sought  by  WorldCom  and  ASCENT. 

 Never  did  the  Commission  indicate  that  it  intended  to  grandfather  resellers  that  provided  service  prior  to  adoption  and  effective  date  of  the  Third  Report  and  Order  with  respect  to  our  registration  requirement. 
 To  the  contrary,  the  Commission  found  that  all  new  and  existing  common  carriers  providing  interexchange  telecommunications  service  must  register  with  the  Commission.  205  As  noted  above,  the 
 Commission  specified  that,  in  situations  where  a  facilities-  based  carrier  was  already  providing  a  reseller  with  service  when  the  registration  requirement  took  effect,  the  reseller  was  obligated  to  notify  its 
 underlying  facilities-  based  carrier  that  it  had  submitted  the  registration  information  to  the  Commission,  within  a  week  of  having  done  so.  206  The  Commission  further  stated  that,  once  the  facilities-  based  carrier 
 had  determined  the  registration  status  of  its  potential  carrier-  customer,  the  facilities-  based  carrier  was  not  responsible  for  monitoring  the  registration  status  of  that  customer  on  an  ongoing  basis,  although  a  prudent 
 carrier  might  choose  to  do  so.  207 
 65.  As  noted  in  the  Third  Report  and  Order,  a  facilities-  based  carrier  will  not  be  responsible  for  the  accuracy  of  the  registration  information,  nor  will  such  a  carrier,  relying  in  good  faith  on  the  absence  of 

 such  registration,  be  liable  under  section  251  of  the  Act  for  withholding  service  from  the  unregistered  entity.  208  The  Commission  may,  however,  after  giving  appropriate  notice  and  opportunity  to  respond, 
 impose  a  fine  on  carriers  that  fail  to  determine  the  registration  status  of  carrier  customers.  209  The  obligation  of  a  reseller  to  register  with  the  Commission,  as  well  as  the  corresponding  duties  of  the 
 underlying  carrier  with  respect  to  the  reseller,  should  not  differ  depending  on  whether  the  reseller  provided  service  prior  to  the  adoption  and  effective  date  of  the  of  the  Third  Report  and  Order.  As  the 
 Commission  noted,  the  registration  requirement  and  related  rules  are  intended  to  deter  facilities-  based 

 201  Id. 
 202  ASCENT  Comments  at  10-  11. 
 203  Id. 
 204  Id. 
 205  Third  Report  and  Order  at    62  (emphasis  added). 
 206  Id. 
 207  Id. 
 208  Id. 
 209  Id.  at    66. 
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 carriers  from  providing  service  to  resellers  that  have  not  registered  with  the  Commission,  which  will,  in  turn,  make  it  more  difficult  for  unscrupulous  resellers  to  stay  in  business.  210 
 IV.  LIABILITY  FOR  UNAUTHORIZED  CARRIER  CHANGES 
 66.  Customer  referral  to  unauthorized  carrier.  In  its  petition,  WorldCom  asserts  that  the  Commission  should  require  carriers  contacted  by  a  subscriber  alleging  slamming  to  inform  the  subscriber 

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

 67.  WorldCom  states  that  many  consumers  suspecting  a  slam  will  contact  either  the  carrier  that  they  consider  to  be  their  authorized  carrier  or  their  LEC.  215  WorldCom  asserts,  however,  that  there  is  no 
 incentive  for  these  carriers  to  refer  the  consumer  to  the  alleged  unauthorized  carrier  for  resolution.  216  WorldCom  acknowledges  that  the  Commissions  rules  require  the  LEC  to  notify  the  alleged  unauthorized 
 carrier  of  a  subscribers  allegation,  but  it  states  that  there  is  no  specified  deadline  for  this  notification.  217  Thus,  according  to  WorldCom,  the  alleged  unauthorized  carrier  may  not  be  aware  of  a  slamming 
 allegation  prior  to  the  filing  of  a  complaint.  218  WorldCom  asserts  that  a  requirement  of  subscriber  referral  to  the  alleged  unauthorized  carrier  would  make  customers  better  apprised  of  their  alternatives  and  thus 
 more  able  to  obtain  relief  without  engaging  in  administrative  litigation.  219  In  addition,  WorldCom  contends,  state  agencies  and  the  Commission  could  avoid  needless  adjudication.  220  WorldCom  asserts 
 that  the  alleged  unauthorized  carrier  is  in  the  best  position,  relative  to  executing  and  authorized  carriers,  to  satisfy  the  customer  by  providing  an  explanation  for  the  establishment  of  the  account,  providing  full 
 remedies,  blocking  future  traffic,  and  advising  the  customer  to  contact  his  or  her  carrier  of  choice  to  establish  an  account.  221  USTA  notes  that  a  disgruntled  customer  might  view  a  referral  to  the  alleged 

 210  Id. 
 211  WorldCom  Petition  at  6.  See  also  AT&  T  Comments  at  9-  10. 
 212  First  Reconsideration  Order  at    34. 
 213  Id.  at    32. 
 214  Id.  at    35. 
 215  WorldCom  Petition  at  5. 
 216  Id.  at  5-  6. 
 217  Id. 
 218  Id. 
 219  Id.  at  6-  7. 
 220  Id. 
 221  Id. 
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 unauthorized  carrier  as  tantamount  to  telling  Little  Red  Riding  Hood  to  go  to  grandmothers  house  to  be  greeted  and  eaten  by  the  big,  bad  wolf,  and  that  customers  may  feel  animosity  towards  a  carrier  that 
 makes  such  a  referral.  222  Verizon  disagrees  that  the  alleged  unauthorized  carrier  is  in  the  best  position  to  satisfy  the  consumer  given  that  it  is  the  one  carrier  that  cannot  actually  return  the  consumer  to  the 
 authorized  carrier.  223  USTA  states  that  the  approach  suggested  by  WorldCom  could  create  an  opportunity  for  the  alleged  unauthorized  carrier  to  market  its  product,  notwithstanding  prior  abusive  conduct  by  that 
 carrier.  224 
 68.  We  currently  require  carriers  contacted  by  a  subscriber  alleging  slamming  to  inform  the  subscriber  of  their  right  to  file  a  complaint  with  the  appropriate  governmental  agency.  225  On 

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

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

 222  USTA  Opposition  at  5. 
 223  Verizon  also  disputes  the  contention  of  WorldCom  that  a  LEC  will  not  be  able  to  provide  the  subscriber  with  a 
 full  30-  day  credit  (see  below  regarding  removal  of  charges  from  a  subscribers  bill  for  the  first  30  days  of  alleged  unauthorized  service)  because  a  LEC  might  not  have  information  about  the  entire  30  days  of  service.  Verizon  states 

 that  WorldCom  is  simply  wrong  and  that  the  LEC  takes  30  days  of  charges  off  of  a  subscribers  bill,  even  if  it  takes  an  additional  billing  cycle  for  the  credits  to  appear  on  the  customers  bill.  Verizon  Opposition  at  5. 
 224  USTA  Opposition  at  5-  6. 
 225  See  47  C.  F.  R.    64.  1150(  b). 
 226  WorldCom  Petition  at  14-  16. 
 227  Id. 
 228  Id. 
 229  Id. 
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 70.  We  decline  to  modify  our  rule  requiring  removal  by  the  unauthorized  carrier  of  all  charges  assessed  for  the  first  30  days  of  service  upon  a  subscribers  allegation  that  he  or  she  was  slammed.  230  We 
 agree  with  Verizon  that  charges  should  not  remain  on  a  subscribers  bill  even  after  the  subscriber  has  complained  to  a  carrier  of  slamming,  and  we  note  that  the  Commissions  rules  already  provide  incentives 
 for  prompt  filing  of  complaints  by  subscribers  with  the  appropriate  agency.  231  In  the  First  Reconsideration  Order,  the  Commission  found  that  absolution  minimizes  slamming  carriers  physical 
 control  over  slamming  revenues,  and  that  this  was  especially  important  given  the  Commissions  experiences  with  slamming  carriers  that  went  out  of  business  or  declared  bankruptcy  after  enforcement 
 agencies  detected  their  illegal  activities.  232  The  Commission  found  that  its  absolution  rule  would  also  encourage  consumers  to  scrutinize  their  bills  immediately  and  carefully,  thereby  engaging  the  public  in 
 slamming  detection.  233  In  addition,  the  Commission  stated  that  the  rule  would  encourage  carriers  to  verify  all  changes  properly  in  order  to  protect  themselves  against  any  improper  allegations  of 
 slamming.  234 
 71.  The  Commission  also  found  that  its  rule  requiring  the  removal  of  charges  should  be  accompanied  by  a  rule  to  encourage  prompt  filing  of  a  complaint  with  the  appropriate  agency.  235 

 Accordingly,  the  Commission  specified  that  any  carrier  informed  by  a  subscriber  of  a  slam  must  convey  to  the  subscriber  that,  if  all  charges  for  the  first  30  days  of  service  are  being  removed  from  such 
 subscriber's  bill,  pending  resolution  of  the  slamming  complaint,  the  subscriber  must  file  the  complaint  with  the  state  commission  (or  the  FCC)  within  30  days  of  notifying  the  carrier  of  the  alleged  slam,  or  be 
 subject  to  re-  billing.  236  In  addition,  the  Commission  stated  that  a  carrier  informed  by  a  subscriber  of  a  slam  must  convey  to  the  subscriber  relevant  filing  information,  including  information  relating  to  the  30- 
 day  timeframe.  237  Thus,  we  believe  that  subscribers  are  sufficiently  motivated  to  promptly  file  complaints  with  the  appropriate  agency,  and  that  WorldComs  concerns  regarding  unreasonable  delays  have  been 
 adequately  addressed. 
 72.  Based  on  our  experience  in  administering  the  slamming  liability  rules,  we  also  believe  that  the  danger  of  unscrupulous  customers  acting  in  the  manner  that  WorldCom  suggests  (i.  e.,  never 

 intending  to  actually  file  a  complaint  in  order  to  escape  rebilling  because  they  are  aware  of  the  inability  of  carriers  to  ascertain  if  a  consumer  filed  a  complaint)  is  remote  at  best.  WorldCom  also  appears  to 
 ignore  the  fact  that  our  rules  require  that,  upon  receipt  of  a  slamming  complaint,  the  appropriate  agency 
 230  For  a  further  explanation  of  the  procedures  that  apply  when  a  subscriber  has  not  paid  charges  to  the  allegedly 
 unauthorized  carrier,  see  the  First  Reconsideration  Order  at    38-  40.  According  to  our  rules,  the  authorized  carrier  has  the  option  of  billing  the  subscriber  for  calls  made  after  the  first  30  days  after  the  slam  at  the  rates  the  subscriber 

 would  have  paid  the  authorized  carrier  absent  the  slam.  Id.  The  Commission,  in  the  First  Reconsideration  Order,  stated  that,  rather  that  actually  re-  rating  the  service  provided  by  the  authorized  carrier,  the  authorized  carrier  may  bill 
 the  subscriber  for  50%  of  the  rate  the  unauthorized  carrier  would  have  charged.  However,  an  authorized  carrier  must  perform  actual  re-  rating  if  the  subscriber  so  requests.  Id. 
 231  Verizon  notes  that  a  LEC  contacted  by  a  subscriber  who  alleges  slamming  will  typically  credit  the  subscriber 
 immediately  and  recourse  the  billed  amount  to  the  carrier.  Verizon  states  that  WorldComs  proposal  seeks  to  put  some  of  the  money  back  into  slamming  in  that  WorldCom  would  rather  have  a  LEC  finance  the  unauthorized 

 carriers  business  until  such  time  as  a  slam  has  been  proven.  Verizon  Opposition  at  5-  6.  232 
 First  Reconsideration  Order  at    10.  233 
 Id.  234 
 Id.  235 
 Id.  at    32.  236 
 47  C.  F.  R.    54.1160(  c).  237 
 Id.  at  note  88. 
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 must  notify  the  alleged  unauthorized  carrier  of  the  slamming  complaint  and  ensure  that  the  carrier  removes  immediately  all  unpaid  charges  from  the  subscribers  bill,  if  it  has  not  done  so  already.  238  We 
 note  that,  in  cases  in  which  the  consumer  has  chosen  not  to  contact  the  alleged  unauthorized  carrier  prior  to  filing  a  complaint  with  the  appropriate  agency,  the  removal  of  charges  may  not  in  fact  occur  until  after 
 the  complaint  has  been  filed,  as  WorldCom  prefers.  Finally,  although  WorldCom  suggests  that  our  rule  granting  preliminary  relief  poses  a  due  process  concern,  WorldComs  proposed  modification  would  also 
 allow  for  removal  of  charges  prior  to  an  investigation  or  hearing.  We  therefore  believe  WorldComs  actual  concern  lies  with  the  issue  of  incentive  for  consumer  fraud,  which  we  address  above.  239 

 73.  Amounts  owed  by  unauthorized  carriers  when  the  subscriber  has  paid  the  unauthorized  carrier.  Section  258  mandates  that  the  unauthorized  carrier  shall  be  liable  to  the  carrier  previously 
 selected  by  the  subscriber  in  an  amount  equal  to  all  charges  paid  by  such  subscriber  after  such  violation.  240  In  addition,  the  legislative  history  specifically  directed  that  the  Commissions  rules 
 implementing  section  258  should  also  provide  that  consumers  be  made  whole.  241  Accordingly,  in  the  First  Reconsideration  Order,  the  Commission  established  a  remedy  that  both  allows  the  authorized 
 carrier  to  retain  an  amount  equal  to  all  charges  paid  by  the  subscriber  to  the  unauthorized  carrier,  and  also  insures  that  subscribers  are  made  whole  by  reimbursing  them  the  amount  they  paid  in  excess  of 
 what  they  would  have  paid  their  preferred  carrier  absent  the  slam  (or  a  proxy  for  such  amount).  242  The  Commission  stated  that,  once  a  carrier  has  been  found  guilty  of  slamming,  the  unauthorized  carrier  shall 
 be  required  to  disgorge  to  the  authorized  carrier  an  amount  adequate  to  satisfy  both  of  these  obligations.  243  The  Commission  found  that  an  approximate  proxy  for  this  amount  is  150%  of  the  amounts  collected  by 
 the  unauthorized  carrier  from  the  subscriber  following  a  slam.  244  Upon  receipt  of  the  money,  the  authorized  carrier  is  required  to  remit  one  third  (i.  e.,  50%  of  what  the  subscriber  paid  to  the  unauthorized 
 carrier)  to  the  injured  subscriber.  245 
 74.  WorldCom  asks  that  the  Commission  reconsider  its  requirement  that  unauthorized  carriers  pay  the  subscribers  authorized  carrier  150%  of  all  charges  paid  by  such  subscriber.  246  WorldCom  states 

 that  the  Commission  misconstrued  the  plain  language  of  the  statute  by  interpreting  the  phrase  liable  to  the  [authorized]  carrier  for  all  payments  received,  to  mean  that  the  authorized  carrier  is  allowed  to  retain 
 an  amount  equal  to  payments  received.  247  WorldCom  states  that  Congress  intended  to  make  the  customer  whole  by  mandating  that  the  unauthorized  carrier  be  liable  in  an  amount  equal  to  all  charges 

 238  First  Reconsideration  Order  at    36;  47  U.  S.  C.    64.  1150(  c). 
 239  WorldCom  Petition  at  14. 
 240  47  U.  S.  C.    258. 
 241  First  Reconsideration  Order  at    17. 
 242  Id. 
 243  Id.  The  Conference  Report  regarding  section  258  provides  that  "[  t]  he  conferees  adopt  the  House  provision  as  a 
 new  section  258  of  the  Communications  Act.  It  is  the  understanding  of  the  conferees  that  in  addition  to  requiring  that  the  carrier  violating  the  Commission's  procedures  must  reimburse  the  original  carrier  for  foregone  revenues,  the 

 Commission's  rules  should  also  provide  that  consumers  are  made  whole."  Joint  Statement  of  Managers,  S.  Conf.  Rep.  No.  104-  230,  104th  Cong.,  2d  Sess.  at  136  (1996)  (Joint  Explanatory  Statement). 
 244  First  Reconsideration  Order  at    17. 
 245  Id. 
 246  WorldCom  Petition  at  11-  13. 
 247  Id.  at  11-  13.. 
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 paid.  248  WorldCom  asserts  that  the  Commission  places  undue  reliance  on  the  fact  that  section  258  provides  for  remedy  in  addition  to  any  other  remedies  available  at  law,  and  that  this  provision  was  not 
 intended  to  allow  the  Commission  to  set  liability  at  an  amount  greater  than  all  charges  paid  by  [the]  subscriber.  249 

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

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

 77.  WorldCom  also  points  to  the  Commissions  statement  in  the  First  Reconsideration  Order  that  the  150%  disgorgement  would  act  as  an  incentive  for  authorized  carriers  to  act  on  slamming  complaints; 
 however,  WorldCom  asserts  that  the  Commission  failed  to  explain  why  reimbursement  for  lost  revenue 
 248  Id. 
 249  Id.  47  U.  S.  C.    258(  b). 
 250  First  Reconsideration  Order    17. 
 251  WorldCom  Petition  at  12. 
 252  First  Reconsideration  Order    19 
 253  Id. 
 254  Id.;  47  U.  S.  C.    206-  208. 
 255  Id. 
 256  Id. 
 257  Id.;  47  U.  S.  C.    258. 
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 fails  to  provide  the  same  incentives.  258  We  agree  with  AT&  T  that  WorldCom  ignores  that  the  50%  increment  to  which  WorldCom  objects  is  required  to  be  turned  over  to  the  subscriber.  259  Thus,  according 
 to  AT&  T,  the  sums  do  not  accrue  to  the  authorized  carrier,  which  must  in  fact  absorb  the  administrative  costs  of  remitting  those  amounts  to  the  consumer,  and  for  which  the  authorized  carrier  receives  no 
 compensation.  260 
 78.  We  continue  to  believe  that  the  150%  proxy  approach  utilized  by  our  current  liability  rules  most  fully  satisfies  the  dual  congressional  mandate  of  section  258.  The  150%  proxy  compensates  the 

 subscriber  while  satisfying  the  requirement  of  liability  of  the  unauthorized  carrier  to  the  authorized  carrier  for  all  amounts  collected  from  the  subscriber.  In  the  First  Reconsideration  Order,  we  noted  that  several 
 carriers,  including  WorldCom,  supported  a  proxy  refund  of  50%  to  the  subscriber  as  fully  compensating  the  consumer  while  sparing  carriers  the  difficult  and  expensive  process  of  actual  re-  rating.  261 

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

 Commissions  liability  rules.  264  WorldCom  notes  that  the  Commissions  rules  do  not  prevent  unauthorized  carriers  from  providing  a  customer  credits  or  reimbursement  prior  to  the  customer  filing  a 
 complaint.  265  WorldCom  states  that  under  such  circumstances,  a  customer  will  be  in  control  of  the  funds  as  if  he  or  she  had  never  paid,  and  the  refunded  or  credited  charges  should  thus  be  considered  unpaid 
 when  calculating  liability  under  the  Commissions  slamming  rules.  266  In  the  alternative,  WorldCom  asks  that  the  Commission  at  a  minimum  clarify  that  credits  or  reimbursements  made  to  the  consumer  are  to  be 

 258  WorldCom  Petition  at  13. 
 259  AT&  T  Comments  at  note  13. 
 260  Id.  AT&  T  asserts  that  this  procedure  can,  if  anything,  more  accurately  be  viewed  as  unfair  to  the  authorized 
 carrier,  and  not  the  unauthorized  carrier  as  is  asserted  by  WorldCom.  261 
 First  Reconsideration  Order    21.  If  the  subscriber  is  failed  to  be  made  whole  by  the  50%  proxy,  the  subscriber  may  ask  the  authorized  carrier  to  re-  rate  the  unauthorized  carrier's  charges  based  on  the  rates  of  the  authorized 

 carrier  and,  on  behalf  of  the  subscriber,  seek  an  additional  refund  from  the  unauthorized  carrier,  to  the  extent  that  the  re-  rated  amount  exceeds  the  50%  of  all  charges  paid  by  the  subscriber  to  the  unauthorized  carrier.  First 
 Reconsideration  Order    52.  262 
 WorldCom  Petition  at  13.  According  to  our  rules,  if  a  subscriber  has  not  already  paid  the  unauthorized  carrier,  the  unauthorized  carrier  must  remove  all  charges  assessed  for  the  first  30  days  of  services  from  a  subscribers  bill 

 upon  the  subscribers  allegation  that  he  or  she  was  slammed.  If  the  subscriber  has  paid  the  unauthorized  carrier,  then  our  reimbursement  rules  (as  described  in    72-  77,  supra)  apply. 
 263  47  C.  F.  R.    54.1160(  c).  Specifically,  the  subscriber  must  file  the  complaint  with  the  state  commission  (or  the 
 FCC)  within  30  days  of  notifying  the  carrier  of  the  alleged  slam,  or  be  subject  to  re-  billing.  264 
 Id.  at  10-  11.  265 
 Id.  266 
 Id. 
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 deducted  from  the  amount  owed  by  a  carrier  found  guilty  of  a  slam.  267  WorldCom  asserts  that  carriers  will  be  discouraged  from  attempting  to  resolve  disputes  directly  with  the  subscriber  if  they  believe  that 
 such  attempts  could  result  in  double  payment.  268 
 81.  We  decline  to  find  that  credited  charges  made  to  the  consumer  before  a  complaint  has  been  filed  should  be  considered  unpaid  when  calculating  liability  under  the  Commissions  slamming  rules, 

 or  that  the  credits  or  reimbursements  should  be  deducted  from  the  amount  owed  by  a  carrier  found  guilty  of  a  slam.  As  SBC  asserts,  the  fact  that  a  carrier  has  chosen  to  attempt  to  appease  a  customer  does  not 
 alter  its  statutory  liability,  as  described  above,  to  the  authorized  carrier.  269  Furthermore,  we  disagree  with  WorldCom  that  this  requirement  discourages  carriers  from  attempting  to  resolve  disputes  directly  with 
 subscribers.  We  believe  that  the  desire  to  avoid  an  agency  determination  of  slamming  creates  a  powerful  incentive  to  satisfy  the  customer  so  that  the  customer  will  be  unlikely  to  file  a  complaint  in  the  first 
 instance.  We  note  that,  in  our  experience  with  administration  of  slamming  complaints,  complaints  are  very  rarely  filed  by  consumers  who  were  previously  credited  or  reimbursed  by  the  unauthorized  carrier. 
 Thus,  it  would  appear  that  customers  who  have  been  satisfied  in  such  a  manner  do  not  generally  file  slamming  complaints  and,  accordingly,  that  carriers  would  have  great  incentives  to  avoid,  in  this  way,  the 
 filing  of  a  complaint. 
 82.  Unauthorized  carrier  changes  resulting  from  LEC  actions.  In  their  Petitions,  Sprint  and  WorldCom  note  that  subscribers  sometimes  request  carrier  changes  by  communicating  directly  with 

 LECs.  270  Sprint  and  WorldCom  ask  that  the  Commission  reconsider  its  apparent  decision  to  classify  as  an  IXC  slam  any  unauthorized  carrier  change  that  occurred  as  a  result  of  a  LEC  mistakenly  executing  a 
 carrier  change  and  informing  an  IXC  that  it  had  gained  a  customer.  271  Sprint  asserts  that  the  IXC  cannot  be  considered  an  unauthorized  carrier  in  this  scenario  because  it  has  not  submitted  the  change  and  is 
 under  no  obligation  to  verify  these  LEC  installs.  272  Sprint  and  WorldCom  express  concern  that  an  IXC  could  nonetheless  be  found  liable  for  slamming  if  accused  under  these  circumstances  because  it  would  be 
 unable  to  produce  valid  proof  of  verification  of  the  carrier  change  as  is  required  by  the  Commissions  rules.  273 

 83.  Section  258  makes  it  unlawful  for  any  telecommunications  carrier  to  submit  or  execute  a  change  in  a  subscribers  selection  of  a  provider  of  telephone  exchange  service  or  telephone  toll  service 
 except  in  accordance  with  such  verification  procedures  as  the  Commission  shall  prescribe.  274  AT&  T  asserts  that  section  258  and  the  Commissions  implementing  regulations  therefore  cannot  be  construed  to 
 impose  liability  upon  an  IXC  when  it  has  not  submitted  a  carrier  change.  275  AT&  T  states  that  an  IXC  that  becomes  a  carrier  through  a  LEC  install  likewise  fails  to  satisfy  the  Commissions  definition  of  an 
 unauthorized  carrier,  and  does  not  incur  liability  under  the  Commissions  rules  that  apply  to  carriers 
 267  Id. 
 268  Id. 
 269  SBC  Opposition  at  3.  AT&  T  notes  that,  if  the  Commission  were  to  grant  WorldComs  request,  it  should  not 
 impair  the  right  of  the  authorized  carrier  to  an  amount  at  least  equal  to  all  sums  paid  by  the  consumer,  as  provided  for  in  section  258  and  implementing  rules.  AT&  T  Comments  at  8. 

 270  Sprint  Petition  at  1;  WorldCom  Petition  at  8. 
 271  Sprint  Petition  at  1-  5;  WorldCom  Petition  at  8-  10. 
 272  Sprint  Reply  at  3. 
 273  Sprint  Petition  at  1-  5;  WorldCom  Petition  at  8-  10. 
 274  47  U.  S.  C.    258  (b). 
 275  AT&  T  Comments  at  3-  5. 
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 that  submit  a  carrier  change.  276  AT&  T  states  that  Sprints  petition  is  thus  superfluous  in  that  it  appears  to  assume  that  such  liability  can  be  imposed  without  any  revision  to  the  First  Reconsideration  Order.  277 
 Sprint  asserts  that  it  makes  little  sense  as  a  policy  matter  to  hold  IXCs  liable  for  the  mistakes  of  LECs,  and  that  it  is  necessary  to  provide  incentives  for  LECs  to  minimize  such  mistakes.  278  Sprint  and 
 WorldCom  state  that  penalizing  a  carrier  that  made  no  mistake  does  not  provide  such  incentives  and  is  especially  inappropriate  considering  that  LECs  and  IXCs  are  competitors  in  the  intraLATA  and, 
 increasingly,  interLATA,  markets.  279 
 84.  Sprint  asks  that  the  Commission  allow  an  alleged  unauthorized  carrier  to  produce  records  that  show  a  subscriber  was  added  to  its  customer  base  due  to  instructions  it  received  from  a  LEC  and,  in  the 

 absence  of  convincing  evidence  by  the  LEC  or  subscriber  to  the  contrary,  the  relevant  agency  should  exonerate  the  unauthorized  carrier  and  instead  require  the  LEC  to  provide  restitution  to  the  subscriber  and 
 authorized  carrier  as  specified  in  the  Rules  as  well  as  pay  the  previously  accused  but  now  exonerated  carrier  for  all  charges  and  fees  incurred  by  the  subscriber  when  such  subscriber  was  erroneously  assigned 
 to  [the]  IXC  by  the  LEC  but  not  paid  by  such  subscriber.  280 
 85.  As  Sprint  and  USTA  note,  the  Commission  has  recognized  that  an  executing  carrier  may  be  responsible  for  an  unauthorized  carrier  change.  281  In  the  First  Reconsideration  Order,  the  Commission 

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

 86.  We  agree  with  Sprint  that  it  would  be  unfair  to  hold  IXCs  liable  for  slamming  pursuant  to  section  258  when  the  unauthorized  carrier  change  was  the  result  of  a  LECs  action.  Sprint  notes  that 
 determinations  of  slamming  by  IXCs  under  these  circumstances  can  create  incentives  for  LECs  to  act  in  ways  that  contravene  the  goals  of  section  258  and  can  damage  the  business  reputation  of  an  innocent 

 276  Id.  at  4.  See  47  C.  F.  R.    64.  1100  (d)  (  The  term  unauthorized  carrier  is  generally  any  telecommunications  carrier 
 that  submits  a  change,  on  behalf  of  a  subscriber,  in  the  subscribers  selection  of  a  provider  of  telecommunications  service  but  fails  to  obtain  the  subscribers  authorization  verified  in  accordance  with  the  procedures  specified  in  this 

 part.);  47  C.  F.  R.    64.  1120  (a)&(  c).  See  also  Excel  Telecommunications,  Inc.  (  Excel)  Reply  at  1-  2.  277 
 AT&  T  Comments  at  3-  5.  278 
 Sprint  Petition  at  2-  3.  279 
 Id.  at  3.  See  also  WorldCom  Petition  at  9;  AT&  T  Comments  at  7.  280 
 Sprint  Petition  at  5.  See  also  Excel  Reply  at  1-  4.  281 
 Sprint  Petition  at  2;  USTA  Opposition  at  2-  4.  282 
 First  Reconsideration  Order  at    98.  283 
 Id.  at    93.  284 
 Id.  at  note  312;  See,  e.  g.,  47  U.  S.  C.    208,  503(  b).  285 
 USTA  Opposition  at  3-  4. 
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 IXC.  286  Verizon  disagrees  that  LECs  should  be  subject  to  the  penalties  invoked  by  section  258,  asserting  that  this  section  authorizes  liability  only  to  a  carrier  that  violates  the  verification  procedures  and  collects 
 charges.  287 
 87.  As  an  initial  matter,  we  note  that  our  authority  to  regulate  in  this  area  flows  not  only  from  section  258  of  the  Act,  but  also  from  other  portions  of  the  Act  which  preceded  the  adoption  of  section 

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

 long  distance  affiliate.  In  order  to  deter  such  actions,  we  believe  that  a  LEC  should  be  held  responsible  for  unauthorized  carrier  changes  that  favor  its  long  distance  affiliate,  in  the  same  manner  that  an  IXC 

 286  Sprint  Petition  at  2-  4. 
 287  Any  telecommunications  carrier  that  violates  the  verification  procedures  described  in  subsection  (a)  and  that 
 collects  charges  for  telephone  exchange  service  or  telephone  toll  service  from  a  subscriber  shall  be  liable  to  the  carrier  previously  selected  by  the  subscriber  in  an  amount  equal  to  all  charges  paid  by  such  subscriber  after  such 

 violation.  47  U.  S.  C.    258(  b).  288 
 In  the  First  Reconsideration  Order,  the  Commission  noted  that  sections  206-  208  of  the  Act  provide  for  actual  and  consequential  damages  for  consumers  upon  the  finding  of  a  slam  (First  Reconsideration  Order,  15  FCC  Rcd  8158, 

 at    19).  Prior  to  the  adoption  of  section  258  of  the  Act,  the  Commission  had  taken  various  steps  to  address  the  slamming  problem;  the  adoption  of  section  258  expanded  the  Commissions  authority  in  this  area.  For  example,  the 
 Commission  required  slamming  carriers,  pursuant  to  sections  201(  b)  and  208  of  the  Act,  to  refund  to  the  subscriber  any  amounts  paid  to  the  slamming  carrier  in  excess  of  what  he  or  she  would  have  paid  the  preferred  carrier  absent 
 the  slam  (Id.).  See  also  statement  of  Commissioner  Michael  K.  Powell  ([  i]  n  light  of  consumers  right  to  sue  for  damages  in  provisions  outside  of  section  258,  as  well  as  the  other  remedies  language  of  section  258  itself  .  .  .  we 
 can  provide  relief  to  consumers  over  and  above  the  authorized  carrier  remedy  in  section  258(  b)).  (Id.,  Statement  of  Michael  K.  Powell). 
 289  See    68-  71,  supra. 
 290  Verizon  Opposition  at  3-  4. 
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 would  be  held  responsible  if  it  submitted  an  unauthorized  change  itself.  Thus,  when  a  LEC  makes  an  unauthorized  carrier  change  that  favors  its  affiliate,  and  when  the  customer  has  paid  the  charges,  the  LEC 
 must  pay  to  the  authorized  carrier  150%  of  the  amounts  collected  from  the  subscriber,  just  as  an  IXC  would  under  similar  circumstances.  291  If  the  consumer  has  not  paid  the  charges,  then  our  absolution  rule 
 would  apply.  292  Our  responsibility  to  provide  remedies  for  consumers  who  experience  unauthorized  carrier  changes  is  equally  compelling  when  a  customer  experiences  an  unauthorized  change  as  the  result 
 of  a  LECs  actions. 
 89.  We  note  that  our  holding  applies  to  any  carrier  acting  as  an  executing  carrier.  In  many  cases,  the  executing  carrier  in  question  will  be  a  LEC;  however,  an  IXC  may  also  act  as  an  executing  carrier, 

 e.  g.,  when  a  facilities-  based  IXC  resells  service  to  a  switchless  reseller  and  that  reseller  submits  a  subscribers  carrier  change  request  to  the  underlying  IXC.  293 

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

 91.  As  noted  by  Sprint  and  WorldCom  above,  since  the  adoption  of  the  Second  Report  and  Order,  however,  many  LECs  have  become  (or  plan  to  become)  long  distance  service  providers.  Given 
 the  large  numbers  of  customers  that  are  now  or  may  soon  be  served  by  LECs  that  also  provide  interexchange  services,  we  find  it  necessary  to  modify  our  decision  to  exclude  from  our  verification  rules 
 those  in-  bound  calls  that  are  initiated  by  a  customer  by  directly  contacting  the  LEC.  The  Commission  has  previously  recognized  that  LECs  that  compete  with  other  carriers  for  local  and  long  distance  services  may 
 not  be  neutral  third  parties  in  implementing  carrier  changes.  299  Due  to  the  changes  in  the  competitive  landscape  that  have  come  to  fruition  since  the  adoption  of  the  Second  Report  and  Order,  and  based  on  our 
 experiences  therewith,  we  now  find  it  necessary,  as  with  other  in-  bound  carrier  change  calls,  to  require  verification  of  carrier  change  requests  that  occur  when  a  customer  initiates  a  call  to  a  LEC.  We  find  that 

 291  47  U.  S.  C.    64.  1170. 
 292  47  U.  S.  C.    64.  1160. 
 293  Second  Report  and  Order,  14  FCC  Rcd  at  1566,    95. 
 294  Id.  at  1547. 
 295  Id.  at  1548. 
 296  Id.  at  1549. 
 297  Id.  at  1565. 
 298  Id. 
 299  Id.  at  1518. 
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 such  verification  is  necessary  to  deter  slamming  and  as  such  furthers  the  goals  of  section  258.  We  emphasize  however,  that  we  retain  our  prohibition  on  executing  carrier  re-  verification,  e.  g.,  a  LEC  may 
 not  require  an  additional  verification  by  the  subscriber  after  a  carrier  submits  a  carrier  change  to  a  LEC  (as  opposed  to  a  customer  seeking  a  carrier  change  by  calling  a  LEC  directly  to  request  the  change). 
 Under  such  circumstances,  the  submitting  carrier  and  the  customer  will  have  already  completed  the  verification  procedures  required  under  our  rules,  and  any  LEC-  mandated  customer  re-  verification  would 
 be  redundant  and  create  unnecessary  impediments  to  carrier  changes. 
 V.  OTHER  ISSUES 
 92.  Toll-  Free  Service  Accounts.  SBC  also  seeks  clarification  that  the  carrier  change  verification  requirements  set  forth  in  the  Second  Report  and  Order  do  not  apply  to  verifications  of  Responsible 

 Organization  (  RespOrg)  changes  for  toll-  free  service  accounts.  300  A  RespOrg  is  the  entity  that  a  consumer  seeking  to  acquire  a  toll-  free  number  must  contact.  RespOrgs  obtain  toll-  free  numbers  from  the 
 Service  Management  System  (SMS/  800)  database  301  and  manage  the  record  for  the  numbers,  including  billing  and  routing  information  as  well  as  information  about  subscribers  IXCs.  RespOrgs  are  the  only 
 entities  that  may  gain  access  to  the  SMS/  800  database.  302  A  subscriber  may  port  its  toll-  free  number  from  one  RespOrg  to  another  RespOrg  by  either  1)  contacting  its  current  RespOrg  and  authorizing  the  change, 
 or  2)  having  the  new  RespOrg  ask  the  SMS/  800  administrator  to  port  the  number  by  submitting  a  written  subscriber  authorization.  303 

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

 300  SBC  Petition  at  13. 
 301  The  SMS/  800  database  is  the  single,  centralized  database  into  which  all  customer  records  and  routing  instructions 
 for  800  numbers  are  located.  See  Provision  of  Access  for  800  Service,  Order,  8  FCC  Rcd  1844,  1845  (Com.  Car.  Bur.  1993)(  NASC  Change  Order). 

 302  See  Provision  of  Access  for  800  Service,  Order,  8  FCC  Rcd  1844,  1845  (Com.  Car.  Bur.  1993)(  NASC  Change 
 Order).  303 
 Id.  304 
 SBC  Petition  at  13.  See  also  SBC  Ex  Parte  submitted  Nov.  10,  1999;  Opposition  of  SBC  to  AT&  T  Application  of  Review  of  Provision  of  Access  for  800  Service,  CC  Docket  No.  86-  10,  Order,  8  FCC  Rcd  1844  (Com.  Car.  Bur. 

 1993)(  NASC  Change  Order);  Provision  of  Access  for  800  Service,  CC  Docket  No.  86-  10,  Order  on  Reconsideration,  14  FCC  Rcd  4347  (Com.  Car.  Bur.  1999)(  Order  on  Reconsideration). 
 305  WorldCom  Comments  at  21. 
 306  Id. 
 307  SBC  Ex  Parte  at  1. 
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 94.  We  note  that,  in  the  NASC  Change  Order,  the  Common  Carrier  Bureau  stated  that  a  RespOrg  change  request  submitted  to  the  SMS/  800  administrator  must  include  proper  written  authorization.  308 
 In  a  subsequent  Order  on  Reconsideration  (NASC  Reconsideration),  the  Common  Carrier  Bureau  clarified  that  it  did  not  intend  [in  the  NASC  Change  Order]  to  allow  [preferred  carrier]  change  procedures  to  be 
 used  for  RespOrg  changes:  we  intended  that  all  RespOrg  change  authorizations  be  in  writing.  309  AT&  T  filed  an  Application  for  Review  of  the  NASC  Reconsideration,  contending  that  the  NASC  Change  Order 
 did  not  preclude  the  use  of  carrier  change  procedures  to  verify  RespOrg  changes  submitted  to  the  SMS/  800  administrator,  including  third  party  verification,  and  that  the  Common  Carrier  Bureau  had  failed 
 to  provide  a  sufficient  explanation  for  a  finding  to  the  contrary  in  the  NASC  Reconsideration,  i.  e.  that  only  written  LOAs  satisfy  the  requirement  of  proper  written  authorization.  310  SBC  filed  an  Opposition  to 
 AT&  Ts  Application  for  Review,  stating  again  that  it  must  be  able  to  continue  the  practice  of  comparing  signatures  it  has  on  file  to  signatures  on  written  LOAs  in  order  to  determine  which  subscribers  to  contact 
 to  make  sure  slamming  does  not  occur.  311  Without  the  signature  comparison  process,  according  to  SBC,  the  RespOrg  would  have  to  contact  the  customer  on  every  800  number  change.  312 

 95.  In  a  subsequent  Clarification  Order,  the  Common  Carrier  Bureau  stated  that,  by  requiring  proper  written  authorization,  it  did  not  intend  to  preclude  the  current  SMS/  800  administrator  practice  of 
 accepting  LOAs  for  RespOrg  change  requests  that  contain  a  subscribers  personal  identification  number  in  lieu  of  the  subscribers  signature.  313  AT&  T  then  withdrew  its  Application  for  Review,  stating  that  its 
 concerns  had  been  addressed  in  the  Clarification  Order.  314  Inasmuch  as  SBC  is  seeking  a  requirement  that  all  RespOrg  change  requests  include  LOAs  with  customer  signatures,  we  note  that  the  Clarification 
 Order  disallows  such  a  result.  In  general,  it  would  not  appear  that  an  entity,  when  providing  RespOrg  service,  is  functioning  as  an  executing  or  submitting  carrier  as  contemplated  by  our  carrier  change 
 rules.  315 
 96.  New  Lines  and  New  Installations.  AT&  T  asks  the  Commission  to  clarify,  or  in  the  alternative  reconsider  and  hold,  that  the  slamming  rules  apply  to  customers  initial  carrier  selections  for 

 newly  installed  lines.  316  AT&  T  asserts  that,  while  nothing  in  the  Second  Report  and  Order  suggests  that  such  customers  be  excluded  from  slamming  protections,  the  Commission  should  state  more  clearly  that 
 the  slamming  rules  apply  to  a  subscribers  selection  of  preferred  carriers,  either  as  an  initial  carrier  selection  or  as  a  change  from  an  existing  choice.  317  AT&  T  notes  that  millions  of  new  subscriber  lines  are 

 308  Provision  of  Access  for  800  Service,  CC  Docket  No.  86-  10,  Order,  8  FCC  Rcd  1844  (Com.  Car.  Bur. 
 1993)(  NASC  Change  Order);  309 
 Id;  Provision  of  Access  for  800  Service,  CC  Docket  No.  86-  10,  Order  on  Reconsideration,  14  FCC  Rcd  4347  (Com.  Car.  Bur.  1999)(  Order  on  Reconsideration). 

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

 311  SBC  Opposition  at  1-  2. 
 312  Id.  at  2. 
 313  Clarification  Order,  14  FCC  Rcd  at  19,  571. 
 314  See  Letter  submitted  by  AT&  T  March  15,  2000  in  CC  Docket  No.  86-  10;  Public  Notice,  DA  00-  642,  AT&  T 
 Corp.  Withdrawal  of  Application  for  Review.  315 
 Any  further  concerns  regarding  RespOrg  issues  should  be  raised  in  the  context  of  our  toll-  free  number  proceedings. 

 316  AT&  T  Petition  at  23-  25.  See  also  Motion  of  AT&  T  Corp.  for  Expedited  Decision  at  1-  7  (  AT&  T  Motion). 
 317  AT&  T  Petition  at  23-  24. 
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 installed  annually  as  businesses  and  residences  expand  or  change  locations.  318  According  to  AT&  T,  excluding  newly  installed  lines  from  application  of  our  slamming  rules  would  deny  many  customers 
 valuable  consumer  protections  and  would  harm  competition.  319  In  AT&  Ts  subsequent  Motion  for  Expedited  Decision,  AT&  T  states  that,  since  the  adoption  of  the  Second  Report  and  Order,  many 
 incumbent  LECs  have  begun  to  offer  long  distance  service,  and  that  incumbent  LECs  do  not  apply  the  anti-  slamming  protections  to  at  least  20  percent  of  all  customers  for  whom  the  incumbent  LECs  submit 
 orders  selecting  their  long  distance  affiliate.  320  AT&  T  asserts  that,  once  LECs  begin  offering  long  distance  service,  they  have  a  vested  interest  in  ensuring  that  their  local  exchange  customers  are  assigned 
 to  their  long  distance  affiliates,  whether  legitimately  or  otherwise.  321 
 97.  Ameritech,  Bell  Atlantic,  and  GTE  urge  the  Commission  to  reject  AT&  Ts  request.  Ameritech  states  that  section  258  of  the  Act  by  its  very  terms  applies  only  to  carrier  changes,  as  it 

 authorizes  the  Commission  to  establish  verification  requirements  for  a  change  in  a  subscribers  selection  of  a  provider  of  telephone  exchange  or  telephone  toll  service.  322  Ameritech  also  asserts  that  AT&  Ts 
 petition  violates  the  Administrative  Procedure  Act  because  the  Notice  in  this  proceeding  in  no  way  suggested  that  the  Commission  would  for  the  first  time  require  verification  of  new  service  orders.  323 
 Ameritech  notes  that  AT&  Ts  petition  for  reconsideration  raises  this  issue  for  the  first  time  and  states  that  the  Commission  cannot  impose  a  verification  requirement  for  initial  carrier  requests  without  proper 
 notice.  324 
 98.  Ameritech  asserts  that  in  any  case  such  a  requirement  is  wholly  unnecessary,  and  disagrees  with  AT&  T  that  slamming  risks  are  high  in  initial  carrier  selections.  325  Ameritech  asserts  that  slamming 

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

 318  AT&  T  Petition  at  25;  AT&  T  Motion  at  5-  6. 
 319  AT&  T  Petition  at  25. 
 320  AT&  T  Motion  for  Expedited  Decision  at  3. 
 321  Id. 
 322  Ameritech  Opposition  at  5,  citing  47  U.  S.  C.    258(  a)(  emphasis  added);  see  also  Bell  Atlantic  Comments  at  3-  4, 
 GTE  Comments  at  5.  323 
 Ameritech  Opposition  at  5-  6.  324 
 Id.  325 
 Id.  at  6.  326 
 Id.  at  7.  327 
 Id.  328 
 Id.  329 
 Id.  at  7-  8;  GTE  Comments  at  5.  330 
 SBC  Reply  at  10. 
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 99.  Sprint  agrees  that  the  slamming  rules  cannot  be  applied  to  new  installations  because  the  statutory  language  only  addresses  changes  of  preferred  carriers.  331  Inasmuch  as  Sprint  also  agrees  with 
 AT&  T  that  the  potential  for  abuse  by  LECs  nevertheless  exists  in  such  situations,  Sprint  asks  instead  that  the  Commission  remove  the  gatekeeper  control  from  LECs  and  establish  an  independent  third  party 
 administrator  for  the  entire  PC  process.  332  WorldCom  states  that  verification  for  new  installations  is  not  needed  if  a  customer  places  an  order  with  the  executing  carrier  and  chooses  an  IXC  unaffiliated  with  the 
 LEC  for  both  long  distance  and  local  toll  service.  333  However,  WorldCom  asserts  that  verification  should  be  obtained  if  the  LEC  or  its  affiliate  has  an  interest  in  the  long  distance  carrier  the  customer  chooses.  334 
 WorldCom  states  that,  while  Ameritech  may  correctly  characterize  unintentional,  unauthorized  changes  as  less  likely  in  new  installation  situations  given  the  amount  of  information  the  executing  carrier  typically 
 collects,  nothing  prevents  the  ILEC  from  intentionally  converting  the  customer  to  its  affiliate.  According  to  WorldCom,  the  rules  should  apply  whenever  LECs  have  the  incentive  and  ability  to  change  a 
 customers  carrier  selection.  335 
 100.  We  decline  AT&  Ts  request  to  clarify,  or  in  the  alternative  reconsider  and  hold,  that  our  slamming  rules  apply  to  new  installations.  336  As  noted  above,  section  258  of  the  Act  provides  that  [  n]  o 

 telecommunications  carrier  shall  submit  or  execute  a  change  in  subscribers  selection  of  a  provider  of  telephone  exchange  service  or  telephone  toll  service  except  in  accordance  with  such  verification 
 procedures  as  the  Commission  shall  prescribe.  337  There  is  no  indication  in  either  the  statute  or  the  legislative  history  that  the  limitations  imposed  by  Congress  regarding  carrier  change  requests  should  be 
 expanded  to  apply  to  situations  in  which  no  carrier  change  has  occurred.  A  finding  to  the  contrary  would  contradict  the  plain  language  of  the  statue,  and  we  therefore  need  not  address  the  additional  arguments 
 raised  in  conjunction  with  AT&  Ts  request.  However,  we  recognize  that,  at  the  time  of  installation,  an  executing  carrier  may  have  only  limited  information  regarding  the  subscribers  carrier,  such  as  carrier 
 identification  codes,  and  may  not  be  aware  of  more  detailed  information,  such  as  the  specifics  of  a  customers  long  distance  calling  plan.  We  stress  that  an  executing  carrier  may  advise  a  customer  that  has 
 contacted  it  to  arrange  new  service  (such  as  when  establishing  service  at  a  new  residence)  to  contact  his  or  her  other  carrier  service  providers  to  further  ensure  that  all  services  are  correctly  installed.  As  noted 
 above,  Ameritech  states  that  LECs  have  incentives  to  ensure  that  unauthorized  services  are  not  present  in  new  installation  situations;  accordingly,  we  would  expect  that  an  executing  carrier  would  find  it  in  its  best 
 interest  to  advise  the  customer  in  such  a  way  as  to  avoid  potential  confusion. 
 101.  We  emphasize,  however,  that  the  statue  does  encompass  all  changes  in  a  subscribers  selection  of  a  provider  of  telecommunications  service,  regardless  of  whether  such  change  occurs  at  the 

 same  time  a  subscriber  changes  residences  or  when  a  business  relocates  or  expands.  As  noted  above,  section  258  of  the  Act  provides  that  [  n]  o  telecommunications  carrier  shall  submit  or  execute  a  change  in 
 subscribers  selection  of  a  provider  of  telephone  exchange  service  or  telephone  toll  service  except  in  accordance  with  such  verification  procedures  as  the  Commission  shall  prescribe.  338  There  is  no 

 331  Sprint  Opposition  at  8. 
 332  Id. 
 333  WorldCom  Comments  at  21-  22;  WorldCom  Reply  Comments  at  7-  8. 
 334  Id.  at  8-  9. 
 335  Id. 
 336  Because  we  deny  AT&  Ts  petition  for  clarification  or  reconsideration,  we  do  not  address  Ameritechs  assertion 
 that  AT&  Ts  petition  violated  the  Administrative  Procedures  Act.  337 
 47  U.  S.  C.    258  (emphasis  added).  338 
 Id.. 
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 indication  in  either  the  statute  or  the  legislative  history  that  carrier  changes  that  coincide  with  new  line  installations  should  be  exempt  from  the  carrier  change  provisions  of  section  258.  The  statute  is  clearly 
 intended  to  ensure  that  consumers  receive  service  from  the  carrier  of  their  choice  without  interference.  It  is  no  less  important  for  carrier  change  verification  to  be  obtained  when  a  consumer  is  receiving  the 
 service  on  new  lines  than  when  the  carrier  change  occurs  without  new  line  installations. 
 102.  Carrier  Reporting  of  Slamming  Allegations  (Form  478).  Sprint  and  WorldCom  ask  the  Commission  to  reconsider  its  carrier  reporting  requirement.  339  According  to  our  rules,  carriers  providing 

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

 invariably  misleading.  346  As  such,  they  argue,  it  cannot  legitimately  be  used  by  the  Commission  as  a  basis  for  investigation  into  a  carriers  practices  and  can  unfairly  damage  a  carriers  reputation.  347  Sprint 
 and  WorldCom  note  that  the  Commission  in  fact  recognized  that  a  subscriber  complaint  is  not,  in  and  of  itself,  dispositive  proof  of  a  slam.  Petitioners  also  state  that  carriers  have  strong  incentives  to  inflate  the 
 number  of  slamming  allegations  received  against  competitors,  and  may  not  even  possess  the  information  necessary  to  enable  them  to  accurately  identify  the  carrier  that  allegedly  slammed  the  consumer.  348  For 
 example,  because  LECs  base  their  reporting  on  the  carrier  identification  codes  (CICs),  allegations  against 

 339  47  C.  F.  R.    64.1180. 
 340  Third  Report  and  Order,  15  FCC  Rcd  15996,  at  paras.  55-  56;  Implementation  of  the  Subscriber  Carrier  Selection 
 Changes  Provisions  of  the  Telecommunications  Act  of  1996;  Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers  Long  Distance  Carriers,  CC  Docket  No.  94-  129,  Order,  FCC  01-  67,  16  FCC  Rcd  4999  (2001) 

 (Order)  at    4-  7.  341 
 Third  Report  and  Order,  15  FCC  Rcd  15996,    55.  342 
 Id.  at    56.  343 
 Id.  344 
 Third  Report  and  Order,  15  FCC  Rcd  15996,    55-  56;  Order,  16  FCC  Rcd  4999,    7.  345 
 Order,  16  FCC  Rcd  4999,  at  paras.  5,  7.  346 
 Sprint  Petition  at  1-  2;  WorldCom  Petition  at  4-  5.  347 
 Id.  348 
 WorldCom  Petition  at  5;  Sprint  Petition  at  3. 
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 switchless  resellers  using  the  CIC  of  their  underlying  facilities-  based  carrier  will  be  reported  against  the  underlying  carrier  rather  than  the  reseller.  349  Sprint  and  WorldCom  state  that  any  reporting  requirement 
 should  at  most  require  that  only  complaints  received  by  the  carrier  from  either  the  Commission  or  the  relevant  state  regulatory  authority  be  reported  (thus  helping  to  ensure  that  there  may  be  at  least  some  basis 
 for  the  allegation),  and  note  that,  in  any  case,  the  Commission  already  requires  the  reporting  of  such  information.  350  Petitioners  further  state  that  the  carrier  reporting  requirement  places  unnecessary  burdens 
 on  carriers  because  the  other  carrier  change  rules  adopted  by  the  Commission  sufficiently  deter  slamming  and  provide  the  means  to  track  offenders,  and  they  note  that  carriers  that  do  not  resolve  disputes  with 
 consumers  will  be  closely  monitored  through  the  complaint  processes  of  state  agencies  and  the  Commission.  351 

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

 349  WorldCom  Petition  at  5,  nt.  16. 
 350  Sprint  Petition  at  5;  WorldCom  Petition  at  5.  States  that  choose  to  administer  the  Commissions  carrier  change 
 rules  are  required  to  file  regularly  with  the  Commission  information  that  details  slamming  activity  in  their  regions.  The  reports  filed  by  the  states  contain  the  number  of  slamming  complaints  handled,  including  data  on  the  number  of 

 valid  complaints  per  carrier;  the  identity  of  top  slamming  carriers;  slamming  trends;  and  other  relevant  information.  See  First  Order  on  Reconsideration,  15  FCC  Rcd  8158    23-  28. 
 351  Id.  at  6. 
 352  AT&  T  Comments  at  3;  BellSouth  Comments  at  2;  Qwest  Comments  at  2. 
 353  BellSouth  Comments  at  2-  3. 
 354  Id. 
 355  Qwest  Comments  at  2-  3. 
 356  Id. 
 357  AT&  T  Comments  at  3. 
 358  Id.  at  6-  8. 
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 carriers  to  provide  information  that  overlaps  with,  but  is  much  less  reliable  than,  the  reports  submitted  by  the  state  agencies.  359 
 105.  Upon  reconsideration,  we  find  that  the  carrier  reporting  requirement  should  be  eliminated.  We  therefore  delete  section  64.1180  of  our  rules.  Our  experience  since  the  adoption  of  the 
 requirement  has  shown  that  the  information  contained  in  such  reports  is  of  limited  utility  in  investigating  allegations  of  slamming;  at  the  same  time,  it  appears  that  the  burdens  associated  with  filing  the  reports  are 
 significant.  As  noted  by  commenters  above,  LECs  in  particular  may  have  great  difficulty  complying  with  the  requirements  in  an  accurate  manner.  For  example,  many  LECs  utilize  mechanized  systems  that  track 
 the  total  number  of  lines  that  a  consumer  alleges  were  slammed;  however,  these  LEC  do  not  generally  have  mechanized  systems  that  convert  the  per-  line  numbers  to  actual  per-  subscriber  numbers.  In  addition, 
 if  a  slam  is  associated  with  a  particular  trunk  group,  a  LECs  order  processing  system  may  attribute  a  slam  to  each  channel  within  that  trunk  group  (e.  g.,  a  slam  within  a  trunk  group  comprised  of  24  channels 
 will  be  reported  as  24  slams  against  the  carrier).  We  also  note  that  hundreds  of  carriers  that  submit  reports  each  reporting  period  do  not  appear  to  have  experienced  any  slamming  problems. 

 106.  More  Stringent  Verification  Requirements.  In  its  Petition  for  Reconsideration  of  the  First  Reconsideration  Order,  WorldCom  asks  the  Commission  to  clarify  that,  when  determining  whether 
 a  change  was  authorized,  the  states  must  use  the  Commissions  definition  of  subscriber  as  set  forth  in  the  Third  Report  and  Order.  360  WorldCom  asserts  that,  if  state  agencies  are  permitted  to  apply  different 
 meanings  to  key  terms  in  the  adjudication  of  slamming  complaints,  the  federal  rules  begin  to  have  little  or  no  purpose.  361  We  decline  to  provide  here  the  clarification  sought  by  WorldCom.  In  the  Third  Report 
 and  Order,  the  Commission  recognized  that  states  have  valuable  insight  into  the  slamming  problems  experienced  by  consumers.  362  The  Commission  clearly  stated  that  it  would  not  require  states  to  limit 
 their  verification  requirements  so  that  they  are  no  more  stringent  than  those  promulgated  by  this  Commission.  363  We  confirm  that,  in  the  areas  in  which  the  states  have  jurisdiction,  federal  verification 
 procedures  constitute  a  floor,  and  the  states  may  choose  to  impose  more  stringent  requirements,  so  long  as  they  are  consistent  with  the  federal  requirements.  364  WorldCom  does  not  identify  a  specific  state  law 
 or  laws  that  it  would  seek  to  have  preempted,  nor  does  it  describe  how  the  particular  law(  s)  conflicts  federal  law  or  obstructs  federal  objectives.  In  the  absence  of  such  evidence,  we  decline  to  preempt  state 
 laws  regarding  the  definition  of  subscriber  in  the  context  of  carrier  change  verification. 
 107.  Underlying  Facilities-  Based  Carrier  Changes.  In  the  Second  Report  and  Order,  the  Commission  adopted  rules  to  clarify  the  appropriate  use  of  preferred  carrier  freezes.  365  The  Commission 

 stated  that,  while  it  believed  that  preferred  carrier  freezes  can  offer  consumers  an  additional  level  of  protection  against  slamming,  they  also  create  the  potential  for  unreasonable  and  anti-  competitive 
 behavior  that  might  affect  negatively  efforts  to  foster  competition  in  all  markets.  366  Specifically,  the  Commission  noted  that  carriers  are  often  dependent  on  LECs  to  administer  preferred  carrier  freeze 

 359  Id. 
 360  WorldCom  Petition  at  9. 
 361  Id. 
 362  Third  Report  and  Order  at    87. 
 363  Id. 
 364  Id. 
 365  Second  Report  and  Order  at    112-  138. 
 366  Id.  at    113. 
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 programs.  367  However,  given  LEC  entry  into  the  market  for  interLATA  services,  and  competition  in  the  local  exchange  and  interLATA  toll  markets,  incumbent  LECs  may  have  incentives  to  market  freezes 
 aggressively  to  their  customers  and  to  use  different  standards  for  placing  and  removing  freezes  depending  on  the  identity  of  the  subscribers  carrier.  368  Since  the  implementation  of  the  Second  Report  and  Order, 
 we  have  received  inquiries  from  LEC  representatives  who  expressed  concern  about  the  risks  of  lifting  a  customers  preferred  carrier  freeze  in  order  to  permit  the  customers  preferred  carrier,  a  switchless 
 reseller,  to  begin  using  the  network  of  a  different  facilities-  based  carrier.  Based  on  our  experiences,  we  clarify  here  that  we  do  not  consider  it  a  lifting  of  a  preferred  carrier  freeze  when  a  LEC  implements  the 
 request  of  a  switchless  reseller  to  change  its  underlying  carrier,  and  makes  the  technical  changes  necessary  to  permit  the  resellers  customer  to  retain  his  or  her  chosen  carrier.  Under  these  circumstances, 
 the  subscribers  preferred  carrier  is  the  switchless  reseller,  and  the  subscriber  does  not  experience  a  carrier  change  when  the  reseller  merely  makes  a  change  to  the  underlying  facilities  it  utilizes. 

 108.  Resolution  of  Informal  Complaints.  In  the  First  Order  on  Reconsideration,  we  modified  our  informal  complaint  rules  to  better  address  the  adjudication  of  unauthorized  carrier  change 
 complaints.  369  The  rule  modifications  were  intended  to  give  consumers  a  wider  array  of  remedies  than  was  available  under  the  former  informal  complaint  rules,  which  did  not  provide  for  the  Commission  to 
 order  monetary  payments  by  carriers  to  consumers  in  situations  involving  unauthorized  carrier  changes.  370  The  rule  modifications  also  provided  for  carrier  change  disputes  to  be  handled  by  appropriate  state 
 commissions  or  this  Commission,  in  cases  where  the  state  has  not  opted  to  administer  our  rules,  rather  than  by  authorized  carriers.  371  Our  current  rules  regarding  informal  complaints  filed  pursuant  to  section 
 258  state  that  [  t]  he  Commission  will  issue  a  written  (or  electronic)  order  informing  the  complainant,  the  unauthorized  carrier,  and  the  authorized  carrier  of  its  finding,  and  ordering  the  appropriate  remedy,  if  any, 
 as  defined  by    64.  1160  through  64.1170  of  this  chapter.  372  Our  rules  also  require  that  the  relevant  governmental  agency  will  determine  whether  an  unauthorized  change,  as  defined  by    64.1100(  e),  has 
 occurred  .  .  .  .  373  In  addition,  our  rules  state  that,  when  a  carrier  is  notified  by  the  relevant  governmental  agency  of  an  unauthorized  carrier  change  complaint,  the  carrier  shall  remove  all  unpaid  charges  for  the 
 first  30  days  after  the  alleged  unauthorized  transfer  pending  a  determination  of  whether  an  unauthorized  change  .  .  .  has  occurred,  if  it  has  not  already  done  so.  374  Given  our  experience  with  the  resolution  of 
 unauthorized  carrier  change  complaints  since  the  promulgation  of  these  rules,  we  believe  that  permitting  flexibility  as  to  the  form  of  complaint  determinations  allows  for  more  efficient  use  of  Commission 
 resources  and  would  speed  the  resolution  of  complaints.  Accordingly,  we  clarify  that,  under  the  appropriate  circumstances,  the  Commission  may  issue  an  order  addressing  an  informal  slamming 
 complaint  in  the  form  of  a  letter,  written  or  electronic,  containing  the  information  required  by  our  rules. 

 367  Id.  at    116. 
 368  Id. 
 369  47  C.  F.  R.    1.719. 
 370  See  First  Order  on  Reconsideration,  15  FCC  Rcd  8158,  note  72. 
 371  Id.  at    22-  43. 
 372  47  C.  F.  R.    1.719(  c). 
 373  47  C.  F.  R.    64.1150(  d). 
 374  47  C.  F.  R.    64.1150(  c). 
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 SECOND  FURTHER  NOTICE  OF  PROPOSED  RULEMAKING 
 Third  Party  Verifications 
 109.  Background.  As  noted  above,  in  the  Third  Report  and  Order,  the  Commission  declined  to  mandate  specific  language  to  be  used  in  third  party  verification  calls.  However,  in  order  to  eliminate 

 uncertainty  as  to  what  constitutes  necessary  and  acceptable  practices,  the  Commission  adopted  minimum  content  requirements  for  third  party  verification.  375  The  Commission  stated  that  minimum  requirements 
 for  such  calls  would  provide  useful  guidance  to  the  third  party  verifiers  and  carriers  without  locking  carriers  into  using  a  set  script.  376  In  addition,  the  Commission  stated  that  the  requirements  would  also 
 permit  more  streamlined  enforcement  by  helping  the  Commission  to  determine  the  adequacy  of  steps  taken  by  independent  third  parties  in  the  verification  process.  377  Accordingly,  the  Commission  concluded 
 that  scripts  for  third  party  verifications  should  elicit,  at  a  minimum,  the  identity  of  the  subscriber;  confirmation  that  the  person  on  the  call  is  authorized  to  make  the  carrier  change;  confirmation  that  the 
 person  on  the  call  wants  to  make  the  change;  the  names  of  the  carriers  affected  by  the  change;  the  telephone  numbers  to  be  switched;  and  the  types  of  service  involved  (i.  e.,  local,  in-  state  toll,  out-  of-  state 
 toll,  or  international  service).  378  The  Commission  noted  that  these  content  requirements  do  not  differ  in  substance  from  the  rules  regarding  LOAs.  379 

 110.  In  addition,  the  Commission  found  that  the  third  party  verification  must  be  conducted  in  the  same  language  that  was  used  in  the  underlying  sales  transaction,  and  that  the  entire  third  party 
 verification  transaction  must  be  recorded.  380  The  Commission  also  reiterated  that,  consistent  with  its  rules  regarding  verifications  generally,  submitting  carriers  must  maintain  and  preserve  the  recordings  for  a 
 minimum  period  of  two  years  after  obtaining  such  verification.  381  The  Commission  observed  that,  if  a  slamming  dispute  arises,  a  recorded  verification  will  help  determine  whether  the  subscriber  was  simply 
 seeking  information  or  was  in  fact  agreeing  to  change  carriers  and,  if  so,  which  service(  s)  the  subscriber  had  agreed  to  change.  382 

 111.  Discussion.  Based  on  our  experience  since  the  effective  date  of  the  Third  Report  and  Order,  we  seek  comment  on  the  need  for  additional  minimum  requirements  for  third  party  verification 
 calls  in  order  to  maximize  their  accuracy  and  efficiency  for  consumers,  carriers,  and  the  Commission.  These  additional  possible  requirements  address  issues  we  have  seen  repeatedly  in  our  enforcement  of  the 
 slamming  liability  rules.  First,  we  seek  comment  on  whether  third  party  verifiers  should  state  the  date  during  the  taped  verification  process.  Through  our  slamming  enforcement  efforts,  we  have  become  aware 
 of  situations  in  which,  for  example,  a  carrier  may  have  obtained  a  valid  authorization  for  a  past  carrier  change,  but  the  customer  has  since  switched  away  from  the  carrier  and  now  alleges  that  he  or  she  was 
 switched  back  to  that  carrier  without  authorization.  Without  a  clearly  articulated  date  on  the  verification  tapes,  the  carrier  could  use  the  former  verification  tape  to  defend  itself  against  the  subsequent 
 unauthorized  change. 
 375  Third  Report  and  Order  at    40. 
 376  Id. 
 377  Id. 
 378  Id. 
 379  Id. 
 380  Id.  at    41. 
 381  Id.  See  also  Second  Report  and  Order  at    74. 
 382  Third  Report  and  Order  at    41. 
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 112.  Next,  we  seek  comment  on  whether  the  verifier  should  explicitly  state  that,  if  the  customer  has  additional  questions  for  the  carriers  sales  representative  regarding  the  carrier  change  after 
 verification  has  begun,  the  verification  will  be  terminated,  and  further  verification  proceedings  will  not  be  carried  out  until  after  the  customer  has  finished  speaking  with  the  sales  representative.  We  note  that, 
 according  to  our  rules,  final  verification  cannot  be  obtained  until  after  the  carriers  sales  representative  has  ceased  speaking  to  the  customer.  Accordingly,  we  seek  comment  as  to  whether  such  a  requirement 
 would  lessen  possible  customer  confusion  in  situations  in  which  a  verification  is  terminated  because  the  customer  seeks  further  discussions  with  the  carriers  sales  agent.  We  also  seek  comment  on  whether  the 
 verifier  should  convey  to  the  customer  that  the  carrier  change  can  be  effectuated  without  any  further  contact  with  the  customer  once  the  verification  has  been  completed  in  full.  We  have  found  that  customers 
 may  not  realize  that  a  carrier  cannot  in  most  cases  undo  a  PIC  change  after  it  has  been  submitted,  even  if  the  subscriber  quickly  requests  cancellation  of  the  change  order. 

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

 VI.  PROCEDURAL  MATTERS 
 A.  Regulatory  Flexibility  Analysis 
 113.  As  required  by  the  Regulatory  Flexibility  Act,  as  amended  (RFA),  384  the  Commission  has  prepared  an  Initial  Regulatory  Flexibility  Analysis  (IRFA)  of  the  possible  significant  economic  impact  on 

 small  entities  of  the  proposals  set  forth  in  this  Second  FNPRM.  The  IRFA  is  set  forth  in  Appendix  C.  Written  public  comments  are  requested  on  the  IRFA.  These  comments  must  be  filed  in  accordance  with 
 the  same  filing  deadlines  as  comments  filed  in  this  Second  FNPRM,  and  must  have  a  separate  and  distinct  heading  designating  them  as  responses  to  the  IRFA.  Appendix  B  sets  forth  a  Supplemental  Final 
 Regulatory  Flexibility  Analysis  for  the  Third  Order  on  Reconsideration. 

 383  We  note  that,  in  least  one  state  (Hawaii),  international  service  is  a  separate  service  such  that  interLATA  service 
 would  not  encompass  both  international  and  state-  to-  state  calls.  384 
 See  5  U.  S.  C.    603.  The  RFA,  5  U.  S.  C.    601-  612,  has  been  amended  by  the  Small  Business  Regulatory  Enforcement  Fairness  Act  of  1966  (SBREFA),  Pub.  L.  No.  104-  121,  Title  II,  110  Stat.  857  (1996). 
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 B.  Paperwork  Reduction  Act  Analysis 
 114.  This  Third  Order  on  Reconsideration  and  Second  Further  Notice  of  Proposed  Rulemaking  contains  either  a  proposed  or  modified  information  collection.  As  part  of  a  continuing  effort  to  reduce 

 paperwork  burdens,  we  invite  the  general  public  and  the  Office  of  Management  and  Budget  (OMB)  to  take  this  opportunity  to  comment  on  the  information  collections  contained  in  this  Third  Order  on 
 Reconsideration  and  Second  Further  Notice  of  Proposed  Rulemaking,  as  required  by  the  Paperwork  Reduction  Act  of  1995,  Public  Law  104-  13.  Public  and  agency  comments  are  due  at  the  same  time  as 
 other  comments  on  this  Third  Order  on  Reconsideration  and  Second  Further  Notice  of  Proposed  Rulemaking;  OMB  comments  are  due  60  days  from  the  date  of  publication  of  this  Third  Order  on 
 Reconsideration  and  Second  Further  Notice  of  Proposed  Rulemaking  in  the  Federal  Register.  Comments  should  address:  (a)  whether  the  proposed  collection  of  information  is  necessary  for  the  proper 
 performance  of  the  functions  of  the  Commission,  including  whether  the  information  shall  have  practical  utility;  (b)  the  accuracy  of  the  Commissions  burden  estimates;  (c)  ways  to  enhance  the  quality,  utility, 
 and  clarity  of  the  information  collected;  and  (d)  ways  to  minimize  the  burden  of  the  collection  of  information  on  the  respondents,  including  the  use  of  automated  collection  techniques  or  other  forms  of 
 information  technology. 
 C.  Ex  Parte  Presentations 
 115.  This  is  a  permit-  but  disclose  notice  and  comment  rulemaking  proceeding.  Members  of  the  public  are  advised  that  ex  parte  presentations  are  permitted,  except  during  the  Sunshine  Agenda  period, 

 provided  they  are  disclosed  under  the  Commissions  rules.  385 
 D.  Filing  of  Comments  and  Reply  Comments 
 114.  We  invite  comment  on  the  issues  and  questions  set  forth  above.  Pursuant  to  sections  1.415  and  1.419  of  the  Commission's  rules,  47  C.  F.  R.    1.415,  1.419,  interested 

 parties  may  file  comments  on  or  before  45  days  after  publication  in  the  Federal  Register,  and  reply  comments  on  or  before  60  days  after  publication  in  the  Federal  Register.  Comments  may 
 be  filed  using  the  Commission's  Electronic  Comment  Filing  System  (ECFS)  or  by  filing  paper  copies.  See  Electronic  Filing  of  Documents  in  Rulemaking  Proceedings,  63  Fed.  Reg.  24121 
 (1998). 
 115.  Comments  filed  through  the  ECFS  can  be  sent  as  an  electronic  file  via  the  Internet  to  <http://  www.  fcc.  gov/  e-  file/  ecfs.  html>.  Generally,  only  one  copy  of  an  electronic 

 submission  must  be  filed.  If  multiple  docket  or  rulemaking  numbers  appear  in  the  caption  of  this  proceeding,  however,  commenters  must  transmit  one  electronic  copy  of  the  comments  to  each 
 docket  or  rulemaking  number  referenced  in  the  caption.  In  completing  the  transmittal  screen,  commenters  should  include  their  full  name,  U.  S.  Postal  Service  mailing  address,  and  the 
 applicable  docket  or  rulemaking  number.  Parties  may  also  submit  an  electronic  comment  by  Internet  e-  mail.  To  get  filing  instructions  for  e-  mail  comments,  commenters  should  send  an  e-mail 
 to  ecfs@  fcc.  gov,  and  should  include  the  following  words  in  the  body  of  the  message,  "get  form."  A  sample  form  and  directions  will  be  sent  in  reply.  Parties  who  choose  to  file  by  paper 
 must  file  an  original  and  four  copies  of  each  filing.  If  more  than  one  docket  or  rulemaking  number  appear  in  the  caption  of  this  proceeding,  commenters  must  submit  two  additional  copies 
 for  each  additional  docket  or  rulemaking  number.  Filings  can  be  sent  by  hand  or  messenger  delivery,  by  commercial  overnight  courier,  or  by  first-  class  or  overnight  U.  S.  Postal  Service 
 mail  (although  we  continue  to  experience  delays  in  receiving  U.  S.  Postal  Service  mail).  The 
 385  See  generally,  47  C.  F.  R.    1.1202,  1.1203,  1.  1206. 
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 Commission's  contractor,  Vistronix,  Inc.,  will  receive  hand-  delivered  or  messenger-  delivered  paper  filings  for  the  Commission's  Secretary  at  236  Massachusetts  Avenue,  N.  E.,  Suite  110, 
 Washington,  D.  C.  20002.  The  filing  hours  at  this  location  are  8:  00  a.  m.  to  7:  00  p.  m.  All  hand  deliveries  must  be  held  together  with  rubber  bands  or  fasteners.  Any  envelopes  must  be 
 disposed  of  before  entering  the  building.  Commercial  overnight  mail  (other  than  U.  S.  Postal  Service  Express  Mail  and  Priority  Mail)  must  be  sent  to  9300  East  Hampton  Drive,  Capitol 
 Heights,  MD  20743.  U.  S.  Postal  Service  first-  class  mail,  Express  Mail,  and  Priority  Mail  should  be  addressed  to  445  12th  Street,  SW,  Washington,  D.  C.  20554.  All  filings  must  be  addressed  to 
 the  Commission's  Secretary,  Office  of  the  Secretary,  Federal  Communications  Commission.  Parties  also  should  send  four  (4)  paper  copies  of  their  filings  to  Kelli  Farmer,  Federal  Communications 
 Commission,  Room  4-  C740,  445  12th  Street,  S.  W.,  Washington,  DC  20554. 
 116.  Written  comments  by  the  public  on  the  proposed  or  modified  information  collections  are  due  on  or  before  45  days  after  the  date  of  publication  in  the  Federal  Register. 

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

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

 VII.  ORDERING  CLAUSES 
 118.  Accordingly,  IT  IS  ORDERED,  pursuant  to  sections  1,  4(  i),  4(  j),  201,  206-  208  and  258  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  154(  j),  201,  206-  208  and  258 

 and  sections  1.421  and  1.  429  of  the  Commissions  rules,  47  C.  F.  R.    1.421  and  1.429,  that  the  Third  Order  on  Reconsideration  and  Second  Further  Notice  of  Proposed  Rulemaking  in  CC  Docket  No. 
 94-  129  IS  ADOPTED,  and  that  Part  64  of  the  Commissions  rules,  47  C.  F.  R.  Part  64,  is  amended  as  set  forth  in  Appendix  A.  The  requirements  of  this  Third  Order  on  Reconsideration  shall 
 become  effective  30  days  after  publication  of  a  summary  thereof  in  the  Federal  Register.  Sections  64.1120  64.  1160,  64.  1170  and  64.1180  contain  new  or  modified  information  collections 
 that  have  not  been  approved  by  OMB.  The  Commission  will  publish  a  document  in  the  Federal  Register  announcing  the  effective  date  of  these  rules. 

 119.  IT  IS  FURTHER  ORDERED  that  the  collection  of  information  contained  herein  is  contingent  upon  approval  by  the  Office  of  Management  and  Budget. 
 120.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  4(  j)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  154(  j),  and  section  1.429  of  the  Commissions  rules, 
 47  C.  F.  R.  1.429,  that  the  petition  for  partial  stay,  filed  by  VoiceLog,  LLC,  IS  DENIED  AS  MOOT. 
 121.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  4(  j),  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  154(  j),  and  section  1.429  of  the  Commissions  rules, 
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 47  C.  F.  R.  1.429,  that  the  petition  for  reconsideration,  filed  by  VoiceLog,  LLC,  IS  GRANTED  IN  PART  AND  DENIED  IN  PART,  to  the  extent  indicated  herein. 
 122.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  4(  j),  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  154(  j),  and  section  1.429  of  the  Commissions  rules, 
 47  C.  F.  R.  1.429,  that  the  petition  for  reconsideration,  filed  by  the  Rural  LECs,  IS  DENIED. 
 123.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  4(  j),  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  154(  j),  and  section  1.429  of  the  Commissions  rules, 

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

 47  C.  F.  R.  1.429,  that  the  petition  for  reconsideration,  filed  by  SBC,  IS  GRANTED  IN  PART  AND  DENIED  IN  PART,  to  the  extent  indicated  herein. 

 125.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  4(  j),  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  154(  j),  and  section  1.429  of  the  Commissions  rules, 
 47  C.  F.  R.  1.429,  that  the  petition  for  reconsideration,  filed  by  AT&  T  on  April  2,  2001,  IS  GRANTED  IN  PART  AND  DENIED  IN  PART,  to  the  extent  indicated  herein,  and  that  the  petition  for 
 reconsideration,  filed  by  AT&  T  on  March  18,  1999,  IS  DENIED. 
 126.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  4(  j),  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  154(  j),  and  section  1.429  of  the  Commissions  rules, 

 47  C.  F.  R.  1.429,  that  the  petitions  for  reconsideration,  filed  by  WorldCom  on  April  2,  2001  and  September  5,  2000,  ARE  GRANTED  IN  PART  AND  DENIED  IN  PART,  to  the  extent  indicated  herein. 

 127.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  4(  j),  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  154(  j),  and  section  1.429  of  the  Commissions  rules, 
 47  C.  F.  R.  1.429,  that  the  petitions  for  reconsideration,  filed  by  Sprint  on  April  2,  2001,  and  September  5,  2000,  ARE  GRANTED  IN  PART  AND  DENIED  IN  PART,  to  the  extent  indicated  herein,  and  the 
 petition  for  reconsideration,  filed  by  Sprint  on  March  18,  1999,  IS  DENIED. 
 121.  IT  IS  FURTHER  ORDERED,  that  the  Commissions  Consumer  and  Governmental  Affairs  Bureau,  Reference  Information  Center,  SHALL  SEND  a  copy  of  this  Third  Report  and  Order  and 

 Second  Further  Notice  of  Proposed  Rulemaking  in  CC  Docket  No.  94-  129,  including  the  Initial  Regulatory  Flexibility  Analysis  and  the  Supplemental  Final  Regulatory  Flexibility  Analysis,  to  the  Chief 
 Counsel  for  Advocacy  of  the  Small  Business  Administration. 

 FEDERAL  COMMUNICATIONS  COMMISSION 

 Marlene  H.  Dortch  Secretary 
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 APPENDIX  A 
 RULES  AMENDED 

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

 1.  Part  64,  Subpart  K,  the  heading  is  revised  to  read  as  follows: 
 Subpart  K-  Changes  in  Preferred  Telecommunications  Service  Providers 
 2.  Section  64.1120  is  amended  by  revising  the  second  sentence  in  paragraph  (c)(  3)(  iii)  to  read  as  follows: 

   64.1120  Verification  of  orders  for  telecommunications  service. 
 *  *  *  *  *  (c)  *  *  * 
 (3)  *  *  *  (iii)  *  *  *  All  third  party  verification  methods  shall  elicit,  at  a  minimum,  the  identity  of  the 
 subscriber;  confirmation  that  the  person  on  the  call  is  authorized  to  make  the  carrier  change;  confirmation  that  the  person  on  the  call  wants  to  make  the  carrier  change;  the  names  of  the 
 carriers  affected  by  the  change  (not  including  the  name  of  the  displaced  carrier);  the  telephone  numbers  to  be  switched;  and  the  types  of  service  involved.  *  *  * 

 *  *  *  *  * 
 3.  Section  64.1130  is  amended  by  revising  paragraph  (j)  to  read  as  follows: 
 64.1130  Letter  of  agency  form  and  content 
 *  *  *  *  * 
 (j)  A  telecommunications  carrier  shall  submit  a  preferred  carrier  change  order  on  behalf  of  a  subscriber  within  no  more  than  60  days  of  obtaining  a  written  or  electronically  signed  letter  of 
 agency.  However,  letters  of  agency  for  multi-  line  and/  or  multi-  location  business  customers  that  have  entered  into  negotiated  agreements  with  carriers  to  add  presubscribed  lines  to  their  business 
 locations  during  the  course  of  a  term  agreement  shall  be  valid  for  the  period  specified  in  the  term  agreement. 

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

 5.  Section  64.1160  is  revised  by  adding  paragraph  (g)  to  read  as  follows: 
   64.1160  Absolution  procedures  where  the  subscriber  has  not  paid  charges. 
 *  *  *  *  *  (g)  When  a  LEC  has  assigned  a  subscriber  to  a  carrier  without  authorization,  and  where  the 
 subscriber  has  not  paid  the  unauthorized  charges,  the  LEC  shall  switch  the  subscriber  to  the  desired  carrier  at  no  cost  to  the  subscriber,  and  shall  also  secure  the  removal  of  the  unauthorized 
 charges  from  the  subscribers  bill  in  accordance  with  the  procedures  specified  in  paragraphs  (a)  -(  f)  of  this  section. 

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

 7.  Remove    64.1180. 
   64.1180  [Removed] 
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 APPENDIX  B 
 Supplemental  Final  Regulatory  Flexibility  Analysis. 
 1.  As  required  by  the  Regulatory  Flexibility  Act  (RFA),  386  an  Initial  Regulatory  Flexibility  Analysis  (IRFA)  was  incorporated  in  the  Third  Report  and  Order  and  Second  Order  on 
 Reconsideration.  387  The  Commission  sought  written  public  comment  on  the  proposals  in  the  Third  Report  and  Order,  including  comment  on  the  IRFA.  A  Final  Regulatory  Flexibility  Analysis  (FRFA)  was 
 incorporated  in  the  Third  Report  and  Order.  388  The  Commission  received  a  number  of  petitions  for  reconsideration  in  response  to  the  Third  Report  and  Order.  Certain  comments  received  are  discussed 
 below,  including  two  received  in  response  to  the  IRFA.  The  instant  Order  addresses  issues  raised  in  those  reconsideration  petitions  and  other  petitions.  This  associated  Supplemental  Final  Regulatory  Flexibility 
 Analysis  (SFRFA)  reflects  revised  or  additional  information  to  that  contained  in  the  FRFA.  This  SFRFA  is  thus  limited  to  matters  raised  in  response  to  the  Third  Report  and  Order  and  addressed  in  the  instant 
 Order.  This  SFRFA  conforms  to  the  RFA.  389 
 A.  Need  for  and  Objectives  of  this  Order  and  the  Rules  Adopted  Herein 

 2.  Section  258  prohibits  any  telecommunications  carrier  from  submitting  or  executing  an  unauthorized  change  in  a  subscribers  selection  of  a  provider  of  telephone  exchange  service  or  telephone 
 toll  service.  This  practice,  known  as  slamming,  distorts  the  telecommunications  market  by  enabling  companies  that  engage  in  fraudulent  activity  to  increase  their  customer  and  revenue  bases  at  the  expense 
 of  consumers  and  law-  abiding  companies.  In  this  Order,  we  address  certain  issues  raised  in  petitions  for  reconsideration  of  the  Second  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  the  First 
 Order  on  Reconsideration,  and  the  Third  Report  and  Order.  Specifically,  in  this  Order  we  modify  the  drop-  off  rule  to  allow  the  sales  agents  of  certain  carriers  to  remain  on  the  line  during  the  Third  Party 
 Verification  (TPV).  390  We  also  discuss  small  business  concerns  with  respect  to  this  rule.  391  We  exempt  multi-  line  and/  or  multi-  location  business  customers  from  our  rule  imposing  a  60-  day  limit  on  the 
 amount  of  time  a  Letter  of  Agency  (LOA)  may  be  considered  valid.  392  We  decline  to  hold  Interexchange  Carriers  (IXCs)  liable  for  slamming  pursuant  to  section  258  when  the  unauthorized  carrier  change  was  the 
 result  of  a  LEC  mistake,  and  LECs  must  verify  carrier  change  requests  made  by  a  customer  directly  to  the  LEC  according  to  our  verification  rules.  We  no  longer  require  carriers  that  provide  telephone  exchange 
 service  and/  or  telephone  toll  service  to  periodically  submit  to  the  Commission  allegations  of  slamming.  We  do  not  require  a  subscriber  to  identify,  either  in  LOAs  or  third  party  verifications,  the  identity  of  the 

 386  See  5  U.  S.  C.    603.  The  RFA,  see  5  U.  S.  C.    601  et.  seq.,  was  amended  by  the  Contract  with  America 
 Advancement  Act  of  1996,  Pub.  L.  104-  121,  110  Stat.  87  (1996)  (CWAA).  Title  II  of  the  CWAA  is  the  Small  Business  Regulatory  Enforcement  Fairness  Act  of  1996  (SBREFA). 

 387  Implementation  of  the  Subscriber  Carrier  Selection  Changes  Provisions  of  the  Telecommunications  Act  of  1996, 
 Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers  Long  Distance  Carriers,  CC  Docket  No.  94-  129,  Third  Report  and  Order  and  Second  Order  on  Reconsideration,  15  FCC  Rcd  15996  (2000)  (Third  Report  and 

 Order);  Errata,  DA  00-  2136  (rel.  Sept.  25,  2000);  Erratum,  DA  00-  292  (rel.  Oct.  4,  2000).  388 
 Section  258  Order,  14  FCC  Rcd  at  1611.  389 
 See  5  U.  S.  C.    604.  390 
 See  supra    35-  37.  391 
 See  supra    35-  42.  392 
 See  supra    49-  53. 
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 displaced  carrier.  This  Order  also  contains  a  Further  Notice  of  Proposed  Rulemaking,  in  which  we  propose  several  additional  modifications  to  our  carrier  change  rules.  Specifically,  we  seek  comment  on 
 rule  modifications  with  respect  to  third  party  verifications. 
 B.  Summary  of  Significant  Issues  Concerning  Small  Entities 

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

 4.  The  RFA  directs  agencies  to  provide  a  description  of  and,  where  feasible,  an  estimate  of  the  number  of  small  entities  that  may  be  affected  by  the  proposed  rules,  if  adopted.  395  The  RFA  generally 
 defines  the  term  small  entity  as  having  the  same  meaning  as  the  terms  small  business,  small  organization,  and  small  governmental  jurisdiction.  396  In  addition,  the  term  small  business  has  the 
 same  meaning  as  the  term  small  business  concern  under  Section  3  of  the  Small  Business  Act.  397  Under  the  Small  business  Act,  a  small  business  concern  is  one  that:  (1)  is  independently  owned  and  operated; 
 (2)  is  not  dominant  in  its  field  of  operation;  and  (3)  satisfies  any  additional  criteria  established  by  the  Small  Business  Administration  (SBA).  398  A  small  organization  is  generally  any  not-  for-  profit  enterprise 
 which  is  independently  owned  and  operated  and  is  not  dominant  in  its  field.  399  Nationwide,  as  of  1992,  there  were  approximately  275,801  small  organizations.  400 

 5.  The  definition  of  small  governmental  jurisdiction  is  one  with  populations  of  fewer  than  50,000.  401  There  are  approximately  85,006  governmental  entities  in  the  nation.  402  This  number  includes 
 393  See  supra    38-  44. 
 394  See  supra    44. 
 395  See  5  U.  S.  C.    603(  b)(  3). 
 396  5  U.  S.  C.    601(  6). 

 397  5  U.  S.  C.    601(  3)  (incorporating  by  reference  the  definition  of  small  business  concern  in  the  Small  Business 
 Act,  15  U.  S.  C.    632).  Pursuant  to  5  U.  S.  C.    601(  3),  the  statutory  definition  of  a  small  business  applies  unless  an  agency,  after  consultation  with  the  Office  of  Advocacy  of  the  Small  Business  Administration  and  after  opportunity 

 for  public  comment  ,  establishes  one  or  more  definitions  of  such  term  which  are  appropriate  to  the  activities  of  the  agency  and  publishes  such  definitions(  s)  in  the  Federal  Register. 

 398  15  U.  S.  C.    632. 
 399  15  U.  S.  C.    601(  4). 
 400  Department  of  Commerce,  U.  S.  Bureau  of  the  Census,  1992  Economic  Census,  Table  6  (special  tabulation  of 
 data  under  contract  to  Office  of  Advocacy  of  the  U.  S.  Small  Business  Administration).  401 
 5  U.  S.  C.    601(  5). 
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 such  entities  as  states,  counties,  cities,  utility  districts  and  school  districts.  There  are  no  figures  available  on  what  portion  of  this  number  has  populations  of  fewer  than  50,00.  However,  this  number  includes 
 38,978  counties,  cities  and  towns,  and  of  those,  37,556,  or  ninety-  six  percent,  have  populations  of  fewer  than  50,000.  403  The  Census  Bureau  estimates  that  this  ratio  is  approximately  accurate  for  all  government 
 entities.  Thus,  of  the  85,006  governmental  entities,  we  estimate  that  ninety-  six  percent,  or  about  81,600,  are  small  entities  that  may  be  affected  by  our  rules. 

 6.  We  have  included  small  incumbent  LECs  in  this  RFA  analysis.  As  noted  above,  a  "small  business"  under  the  RFA  is  one  that,  inter  alia,  meets  the  pertinent  small  business  size  standard  (e.  g., 
 wireline  telecommunications  business  having  1,500  or  fewer  employees),  and  "is  not  dominant  in  its  field  of  operation."  404  The  SBA's  Office  of  Advocacy  contends  that,  for  RFA  purposes,  small  incumbent  LECs  are 
 not  dominant  in  their  field  of  operation  because  any  such  dominance  is  not  "national"  in  scope.  405  We  have  therefore  included  small  incumbent  LECs  in  this  RFA  analysis,  although  we  emphasize  that  this  RFA  action 
 has  no  effect  on  the  Commission's  analyses  and  determinations  in  other,  non-  RFA  contexts. 
 7.  Incumbent  Local  Exchange  Carriers.  Neither  the  Commission  nor  the  SBA  has  developed  a  specific  small  business  size  standard  for  providers  of  incumbent  local  exchange  services.  The  closest 

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

 The  closest  applicable  size  standard  under  the  SBA  rules  is  for  Wired  Telecommunications  Carriers.  Under  that  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  409  According  to  the  FCC's 
 Telephone  Trends  Report  data,  532  companies  reported  that  they  were  engaged  in  the  provision  of  either  competitive  access  provider  services  or  competitive  local  exchange  carrier  services.  410  Of  these  532 

 (...  continued  from  previous  page)  402  1992  Census  of  Governments,  U.  S.  Bureau  of  the  Census,  U.  S.  Department  of  Commerce. 
 403  Id. 
 404  5  U.  S.  C.    601(  3). 
 405  See  Letter  from  Jere  W.  Glover,  Chief  Counsel  for  Advocacy,  SBA,  to  Chairman  William  E.  Kennard,  FCC 
 (May  27,  1999).  The  Small  Business  Act  contains  a  definition  of  "small  business  concern,"  which  the  RFA  incorporates  into  its  own  definition  of  "small  business."  See  5  U.  S.  C.    632(  a)  (Small  Business  Act);  5  U.  S.  C. 

 601(  3)  (RFA).  SBA  regulations  interpret  "small  business  concern"  to  include  the  concept  of  dominance  on  a  national  basis.  13  C.  F.  R.    121.  102(  b). 
 406  13  C.  F.  R.    121.201,  NAICS  code  513310. 
 407  FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service, 
 at  Table  5.3,  p  5-  5  (May  2002)  (Telephone  Trends  Report).  408 
 Id.  409 
 13  C.  F.  R.    121.201,  NAICS  code  513310.  410 
 Telephone  Trends  Report,  Table  5.3. 
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 companies,  an  estimated  411  have  1,500  or  fewer  employees  and  121  have  more  than  1,500  employees.  411  Consequently,  the  Commission  estimates  that  the  majority  of  providers  of  competitive  local  exchange 
 service  are  small  entities  that  may  be  affected  by  the  rules. 
 9.  Competitive  Access  Providers.  Neither  the  Commission  nor  the  SBA  has  developed  a  specific  size  standard  for  competitive  access  providers  (CAPS).  The  closest  applicable  standard  under  the 

 SBA  rules  is  for  Wired  Telecommunications  Carriers.  Under  that  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  412  According  to  the  FCC's  Telephone  Trends  Report  data,  532  CAPs  or 
 competitive  local  exchange  carriers  and  55  other  local  exchange  carriers  reported  that  they  were  engaged  in  the  provision  of  either  competitive  access  provider  services  or  competitive  local  exchange  carrier 
 services.  413  Of  these  532  competitive  access  providers  and  competitive  local  exchange  carriers,  an  estimated  411  have  1,500  or  fewer  employees  and  121  have  more  than  1,500  employees.  414  Of  the  55 
 other  local  exchange  carriers,  an  estimated  53  have  1,500  or  fewer  employees  and  2  have  more  than  1,500  employees.  415  Consequently,  the  Commission  estimates  that  the  majority  of  small  entity  CAPS  and  the 
 majority  of  other  local  exchange  carriers  may  be  affected  by  the  rules. 
 10.  Local  Resellers.  The  SBA  has  developed  a  specific  size  standard  for  small  businesses  within  the  category  of  Telecommunications  Resellers.  Under  that  standard,  such  a  business  is  small  if  it 

 has  1,500  or  fewer  employees.  416  According  to  the  FCC's  Telephone  Trends  Report  data,  134  companies  reported  that  they  were  engaged  in  the  provision  of  local  resale  services.  417  Of  these  134  companies,  an 
 estimated  131  have  1,500  or  fewer  employees  and  3  have  more  than  1,500  employees.  418  Consequently,  the  Commission  estimates  that  the  majority  of  local  resellers  may  be  affected  by  the  rules. 

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

 12.  Interexchange  Carriers.  Neither  the  Commission  nor  the  SBA  has  developed  a  specific  size  standard  for  small  entities  specifically  applicable  to  providers  of  interexchange  services.  The  closest 
 applicable  size  standard  under  the  SBA  rules  is  for  Wired  Telecommunications  Carriers.  Under  that  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  422  According  to  the  FCCs 

 411  Id. 
 412  13  C.  F.  R.    121.201,  NAICS  code  513310. 
 413  Telephone  Trends  Report,  Table  5.3. 
 414  Id. 
 415  Id. 
 416  13  C.  F.  R.    121.201,  NAICS  code  513330. 
 417  Telephone  Trends  Report,  Table  5.3. 
 418  Id. 
 419  13  C.  F.  R.    121.201,  NAICS  code  513330. 
 420  Telephone  Trends  Report,  Table  5.3. 
 421  Id. 
 422  13  C.  F.  R.    121.201,  NAICS  code  513310. 
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 Telephone  Trends  Report  data,  229  carriers  reported  that  their  primary  telecommunications  service  activity  was  the  provision  of  interexchange  services.  423  Of  these  229  carriers,  an  estimated  181  have 
 1,500  or  fewer  employees  and  48  have  more  than  1,500  employees.  424  Consequently,  we  estimate  that  a  majority  of  IXCs  may  be  affected  by  the  rules. 

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

 14.  Prepaid  Calling  Card  Providers.  The  SBA  has  developed  a  size  standard  for  small  businesses  within  the  category  of  Telecommunications  Resellers.  Under  that  size  standard,  such  a 
 business  is  small  if  it  has  1,500  or  fewer  employees.  428  According  to  the  FCC's  Telephone  Trends  Report  data,  32  companies  reported  that  they  were  engaged  in  the  provision  of  prepaid  calling  cards.  429  Of  these 
 32  companies,  an  estimated  31  have  1,500  or  fewer  employees  and  one  has  more  than  1,500  employees.  430  Consequently,  the  Commission  estimates  that  a  majority  of  prepaid  calling  providers  may 
 be  affected  by  the  rules. 
 15.  Other  Toll  Carriers.  Neither  the  Commission  nor  the  SBA  has  developed  a  specific  size  standard  for  small  entities  specifically  applicable  to  "Other  Toll  Carriers."  This  category  includes  toll 

 carriers  that  do  not  fall  within  the  categories  of  interexchange  carriers,  operator  service  providers,  prepaid  calling  card  providers,  satellite  service  carriers,  or  toll  resellers.  The  closest  applicable  size  standard 
 under  the  SBA  rules  is  for  Wired  Telecommunications  Carriers.  Under  that  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  431  According  to  the  FCC's  Telephone  Trends  Report  data,  42 
 carriers  reported  that  they  were  engaged  in  the  provision  of  "Other  Toll  Services."  432  Of  these  42  carriers,  an  estimated  37  have  1,500  or  fewer  employees  and  five  have  more  than  1,500  employees.  433 
 Consequently,  the  Commission  estimates  that  a  majority  of  Other  Toll  Carriers"  may  be  affected  by  the  rules. 

 D.  Summary  of  Projected  Reporting,  Recordkeeping,  and  Other  Compliance  Requirements 
 423  Telephone  Trends  Report,  Table  5.  3. 
 424  Id. 
 425  13  C.  F.  R.    121.201,  NAICS  code  513310. 
 426  Telephone  Trends  Report,  Table  5.3. 
 427  Id. 
 428  13  C.  F.  R.    121.201,  NAICS  code  513330. 
 429  Telephone  Trends  Report,  Table  5.3. 
 430  Id. 
 431  13  C.  F.  R.    121.201,  NAICS  code  513310. 
 432  Telephone  Trends  Report,  Table  5.3. 
 433  Id. 
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 16.  Below,  we  analyze  the  projected  reporting,  recordkeeping,  and  other  compliance  requirements  that  may  affect  small  entities. 
 17.  Verification  of  Carrier  Changes    Independent  Third  Party  Verification.  We  modify  our  rule  on  third  party  verification  to  exempt  carriers  that  certify  to  the  Commission  that  they  are  unable  to 
 comply  with  the  rule.  We  are  persuaded  that  compliance  with  the  current  drop-  off  rule  may  be  infeasible  for  carriers,  including  smaller  carriers,  that  lack  the  technical  means  to  comply  or  for  which  enabling 
 equipment  upgrades  are  economically  infeasible.  However,  if  a  sales  agent  of  an  exempted  carrier  responds  to  a  request  by  the  customer  for  additional  information,  the  third  party  verification  must  be 
 terminated.  A  new  third  party  verification  may  commence  only  after  the  sales  agent  has  finished  responding  to  the  customer  inquiry.  Any  third  party  verification  obtained  before  a  carriers  sales 
 representative  has  finished  providing  information  regarding  the  carrier  change  will  not  be  considered  valid.  The  modification,  as  created  here,  will  therefore  likely  reduce  the  costs  for  upgrading  the  network 
 and  revising  internal  processes  for  signing  up  new  customers,  and  retraining  employees  on  how  to  use  the  new  network  upgrades  and  internal  processes.  We  were  not  able  to  identify  alternatives  that  would  have 
 lessened  the  economic  on  small  entities  while  remaining  consistent  with  the  Commissions  objectives. 
 18.  60-  Day  Limit  on  the  Effectiveness  of  an  LOA.  We  exempt  multi-  line  and/  or  multi-location  business  customers  from  the  60-  day  limit.  The  Commission  concludes  that  this  requirement 

 would  not  impose  significant  additional  costs  or  administrative  burdens  on  small  carriers.  434 
 19.  Unauthorized  Carrier  Changes  Resulting  From  LEC  Actions.  We  decline  to  hold  the  IXC  liable  for  slamming  when  the  unauthorized  carrier  change  was  the  result  of  a  LEC  mistake.  LECs 

 will  be  liable  for  unauthorized  carrier  changes  that  are  the  result  of  the  LECs  mistake.  LECs  will  also  be  required  to  follow  the  Commissions  series  of  verification  rules  when  a  customer  contacts  the  LEC 
 directly  to  request  a  carrier  change.  435 
 20.  Carrier  Reporting  of  Slamming  Allegations  (Form  478).  The  Commission  will  no  longer  require  carriers  that  provide  telephone  exchange  service  and/  or  telephone  toll  service  to  periodically 

 submit  to  the  Commission  reports  regarding  complaints  they  receive  alleging  unauthorized  carrier  changes    form  478.  The  change  in  the  rule  will  alleviate  the  administrative  burdens  associated  with 
 filing  the  reports. 
 E.  Steps  Taken  to  Minimize  the  Significant  Economic  Impact  of  This  Order  on  Small  Entities,  Including  the  Significant  Alternatives  Considered. 

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

 434  See  supra    52-  53. 
 435  See  supra    86-  89. 
 436  5  U.  S.  C.    603(  c)(  1)    (c)(  4). 
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 Commission  was  persuaded  by  VoiceLog  that  compliance  with  the  rule  as  created  in  the  Third  Report  and  Order  may  have  been  infeasible  for  some  carriers,  including  smaller  carriers,  and  therefore  in  order  to 
 minimize  any  adverse  impact  of  the  TPV  rule  on  small  entities,  the  Commission  modified  the  TPV  rule  to  allow  for  an  exception  for  those  carriers  that  certify  that  they  are  unable  to  comply  with  the  drop-  off  rule. 
 Other  alternatives  where  suggested  by  VoiceLog  and  AT&  T,  including  allowing  the  sales  agent  to  remain  on  the  line  and  answer  questions  during  verification  were  rejected  because  they  either  compromised  the 
 independent  nature  of  the  third  party  verification  or  were  not  likely  to  have  an  effect  on  our  goals  of  reducing  slams.  Self-  certification  will  likely  be  less  costly  to  a  small  business  than  the  costs  in  upgrading 
 the  network  and  revising  internal  processes  for  signing  up  new  customers,  and  retraining  employees  on  how  to  use  the  new  network  upgrades. 

 23.  60-  Day  Limit  on  the  Effectiveness  of  an  LOA.  We  expect  that  exemption  we  create  will  have  no  significant  economic  impact  on  carriers. 
 24.  Unauthorized  Carrier  Changes  Resulting  from  LEC  Actions.  The  Commission  is  persuaded  that  when  a  LEC  has  assigned  a  subscriber  to  a  non-  affiliated  carrier  without  authorization,  and 
 where  the  subscriber  has  paid  the  non-  affiliated  carrier  the  charges  for  the  billed  service,  the  LEC  shall  reimburse  the  subscriber  for  all  charges  paid  by  the  subscriber  to  the  unauthorized  carrier  and  shall  switch 
 the  subscriber  to  the  desired  carrier  at  no  cost  to  the  subscriber.  When  the  subscriber  has  not  paid  the  unauthorized  carrier,  the  LEC  shall  switch  the  subscriber  to  the  desired  carrier  at  no  cost  to  the  subscriber, 
 and  shall  also  secure  the  removal  of  the  unauthorized  charges  from  the  subscribers  bill.  In  order  to  deter  such  actions,  we  believe  that  a  LEC  should  be  held  responsible  for  unauthorized  carrier  changes  that  favor 
 its  long  distance  affiliate,  in  the  same  manner  that  an  IXC  would  be  held  responsible  if  it  submitted  an  unauthorized  change  itself.  The  alternatives,  i.  e.,  holding  the  customer  or  the  carrier  liable  for  mistakes 
 made  by  the  LEC  were  rejected  as  contrary  to  the  slamming  portions  of  the  Act  and  fundamentally  unfair.  Because  LECs  will  be  held  responsible  for  their  own  mistakes,  LECs  must  also  follow  our  verification 
 rules  when  contacted  directly  by  a  subscriber  that  requests  a  carrier  change,  such  that  a  record  of  the  carrier  change  request  is  created  and  maintained. 

 25.  Carrier  Reporting  of  Slamming  Allegations  (Form  478).  In  eliminating  our  rule  requiring  carriers  to  submit  Form  478,  the  Commission  removed  the  burdens  placed  on  carriers  to  provide 
 information  that  could  be  misleading  and  damaging  to  a  carrier;  LECs  in  particular  may  have  great  difficulty  complying  with  the  requirements  in  an  accurate  manner.  This  change  in  our  rule  will  likely 
 reduce  significantly  the  administrative  burdens  on  carriers,  including  those  smaller  carriers. 
 26.  Report  to  Congress:  The  Commission  will  send  a  copy  of  the  Third  Order  on  Reconsideration  and  Second  Further  Notice  of  Proposed  Rulemaking  (Second  Further  Notice),  including 

 this  Supplemental  FRFA,  in  a  report  to  be  sent  to  Congress  pursuant  to  the  Congressional  Review  Act.  437  In  addition,  the  Commission  will  send  a  copy  of  the  Third  Order  on  Reconsideration,  including  this 
 Supplemental  FRFA,  to  the  Chief  Counsel  for  Advocacy  of  the  SBA.  A  copy  of  the  Third  Order  on  Reconsideration  and  Supplemental  FRFA  (or  summaries  thereof)  will  also  be  published  in  the  Federal 
 Register.  438 

 437  See  5  U.  S.  C.    801(  a)(  1)(  A). 
 438  See  5  U.  S.  C.    604(  b). 
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 APPENDIX  C 
 Initial  Regulatory  Flexibility  Analysis 
 1.  As  required  by  the  Regulatory  Flexibility  Act  (RFA),  as  amended,  439  the  Commission  has  prepared  this  present  Initial  Regulatory  Flexibility  Analysis  (IRFA)  of  the  possible  significant 
 economic  impact  on  small  entities  by  the  policies  and  rules  proposed  in  this  Third  Order  on  Reconsideration  and  Second  Further  Notice  of  Proposed  Rulemaking  (Second  Further  Notice).  Written 
 public  comments  are  requested  on  this  IRFA.  Comments  must  be  identified  as  responses  to  the  Second  Further  Notice.  The  Commission  will  send  a  copy  of  the  Notice,  including  this  IRFA,  to  the  Chief 
 Counsel  for  Advocacy  of  the  Small  Business  Administration.  See  5  U.  S.  C.    603(  a).  In  addition,  the  Notice  and  the  IRFA  (or  summaries  thereof)  will  be  published  in  the  Federal  Register. 

 A.  Need  for,  and  Objectives  of,  the  Proposed  Rules 
 2.  Section  258  prohibits  any  telecommunications  carrier  from  submitting  or  executing  an  unauthorized  change  in  a  subscribers  selection  of  a  provider  of  telephone  exchange  service  or  telephone 
 toll  service.  This  practice,  known  as  slamming,  distorts  the  telecommunications  market  by  enabling  companies  that  engage  in  fraudulent  activity  to  increase  their  customer  and  revenue  bases  at  the  expense 
 of  consumers  and  law-  abiding  companies.  In  this  Order,  we  address  certain  issues  raised  in  petitions  for  reconsideration  of  the  Second  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  the  First 
 Order  on  Reconsideration,  and  the  Third  Report  and  Order.  This  Order  also  contains  a  Second  Further  Notice  of  Proposed  Rulemaking,  in  which  we  propose  several  modifications  to  our  carrier  change  rules. 
 Specifically,  we  seek  comment  on  rule  modifications  with  respect  to  third  party  verifications. 
 B.  Legal  Basis 
 3.  The  Second  Further  Notice  is  adopted  pursuant  to  Sections  1,  4(  i),  4(  j)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  154(  j),  and  section  1.429  of  the 
 Commissions  Rules,  47  C.  F.  R.    1.429. 
 C.  Description  and  Estimate  of  the  Number  of  Small  Entities  to  Which  the  Proposed  Rules  Will  Apply 

 4.  The  RFA  directs  agencies  to  provide  a  description  of  and,  where  feasible,  an  estimate  of  the  number  of  small  entities  that  may  be  affected  by  the  proposed  rules,  if  adopted.  440  The  RFA  generally 
 defines  the  term  small  entity  as  having  the  same  meaning  as  the  terms  small  business,  small  organization,  and  small  governmental  jurisdiction.  441  In  addition,  the  term  small  business  has  the 

 same  meaning  as  the  term  small  business  concern  under  Section  3  of  the  Small  Business  Act.  442 

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

 440  See  5  U.  S.  C.    603(  b)(  3). 
 441  5  U.  S.  C.    601(  6). 

 442  5  U.  S.  C.    601(  3)  (incorporating  by  reference  the  definition  of  small  business  concern  in  the  Small  Business 
 Act,  15  U.  S.  C.    632).  Pursuant  to  5  U.  S.  C.    601(  3),  the  statutory  definition  of  a  small  business  applies  unless  an  agency,  after  consultation  with  the  Office  of  Advocacy  of  the  Small  Business  Administration  and  after  opportunity 

 (continued....) 
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 Under  the  Small  business  Act,  a  small  business  concern  is  one  that:  (1)  is  independently  owned  and  operated;  (2)  is  not  dominant  in  its  field  of  operation;  and  (3)  satisfies  any  additional  criteria  established 
 by  the  Small  Business  Administration  (SBA).  443  A  small  organization  is  generally  any  not-  for-  profit  enterprise  which  is  independently  owned  and  operated  and  is  not  dominant  in  its  field.  444  Nationwide,  as 
 of  1992,  there  were  approximately  275,801  small  organizations.  445 
 5.  The  definition  of  small  governmental  jurisdiction  is  one  with  populations  of  fewer  than  50,000.  446  There  are  approximately  85,006  governmental  entities  in  the  nation.  447  This  number  includes 

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

 6.  We  have  included  small  incumbent  LECs  in  this  RFA  analysis.  As  noted  above,  a  "small  business"  under  the  RFA  is  one  that,  inter  alia,  meets  the  pertinent  small  business  size  standard  (e.  g.,  a 
 wireline  telecommunications  business  having  1,500  or  fewer  employees),  and  "is  not  dominant  in  its  field  of  operation."  449  The  SBA's  Office  of  Advocacy  contends  that,  for  RFA  purposes,  small  incumbent  LECs  are 
 not  dominant  in  their  field  of  operation  because  any  such  dominance  is  not  "national"  in  scope.  450  We  have  therefore  included  small  incumbent  LECs  in  this  RFA  analysis,  although  we  emphasize  that  this  RFA  action 
 has  no  effect  on  the  Commission's  analyses  and  determinations  in  other,  non-  RFA  contexts. 
 7.  Incumbent  Local  Exchange  Carriers.  Neither  the  Commission  nor  the  SBA  has  developed  a  specific  small  business  size  standard  for  providers  of  incumbent  local  exchange  services.  The  closest 

 applicable  size  standard  under  the  SBA  rules  is  for  Wired  Telecommunications  Carriers.  Under  that  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  451  According  to  the  FCCs  Telephone 
 Trends  Report  data,  1,  329  incumbent  local  exchange  carriers  reported  that  they  were  engaged  in  the 

 (...  continued  from  previous  page)  for  public  comment  ,  establishes  one  or  more  definitions  of  such  term  which  are  appropriate  to  the  activities  of  the 
 agency  and  publishes  such  definitions(  s)  in  the  Federal  Register. 
 443  15  U.  S.  C.    632. 
 444  Id.    601(  4). 
 445  Department  of  Commerce,  U.  S.  Bureau  of  the  Census,  1992  Economic  Census,  Table  6  (special  tabulation  of 
 data  under  contract  to  Office  of  Advocacy  of  the  U.  S.  Small  Business  Administration).  446 
 5  U.  S.  C.    601(  5).  447 
 1992  Census  of  Governments,  U.  S.  Bureau  of  the  Census,  U.  S.  Department  of  Commerce.  448 
 Id.  449 
 5  U.  S.  C.    601(  3).  450 
 See  Letter  from  Jere  W.  Glover,  Chief  Counsel  for  Advocacy,  SBA,  to  Chairman  William  E.  Kennard,  FCC  (May  27,  1999).  The  Small  Business  Act  contains  a  definition  of  "small  business  concern,"  which  the  RFA 

 incorporates  into  its  own  definition  of  "small  business."  See  5  U.  S.  C.    632(  a)  (Small  Business  Act);  5  U.  S.  C.  601(  3)  (RFA).  SBA  regulations  interpret  "small  business  concern"  to  include  the  concept  of  dominance  on  a 
 national  basis.  13  C.  F.  R.    121.  102(  b).  451 
 13  C.  F.  R.    121.201,  NAICS  code  513310. 
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 provision  of  local  exchange  services.  452  Of  these  1,329  carriers,  an  estimated  1,024  have  1,500  or  fewer  employees  and  305  have  more  than  1,500  employees.  453  Consequently,  we  estimate  that  the  majority  of 
 providers  of  local  exchange  service  are  small  entitles  that  may  be  affected  by  the  rules  and  policies  adopted  herein. 

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

 SBA  rules  is  for  Wired  Telecommunications  Carriers.  Under  that  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  457  According  to  the  FCC's  Telephone  Trends  Report  data,  532  CAPs  or 
 competitive  local  exchange  carriers  and  55  other  local  exchange  carriers  reported  that  they  were  engaged  in  the  provision  of  either  competitive  access  provider  services  or  competitive  local  exchange  carrier 
 services.  458  Of  these  532  competitive  access  providers  and  competitive  local  exchange  carriers,  an  estimated  411  have  1,500  or  fewer  employees  and  121  have  more  than  1,500  employees.  459  Of  the  55 
 other  local  exchange  carriers,  an  estimated  53  have  1,500  or  fewer  employees  and  2  have  more  than  1,500  employees.  460  Consequently,  the  Commission  estimates  that  the  majority  of  small  entity  CAPS  and  the 
 majority  of  other  local  exchange  carriers  may  be  affected  by  the  rules. 
 10.  Local  Resellers.  The  SBA  has  developed  a  specific  size  standard  for  small  businesses  within  the  category  of  Telecommunications  Resellers.  Under  that  standard,  such  a  business  is  small  if  it 

 has  1,500  or  fewer  employees.  461  According  to  the  FCC's  Telephone  Trends  Report  data,  134  companies  reported  that  they  were  engaged  in  the  provision  of  local  resale  services.  462  Of  these  134  companies,  an 
 estimated  131  have  1,500  or  fewer  employees  and  3  have  more  than  1,500  employees.  463  Consequently, 

 452  FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service, 
 at  Table  5.3,  p  5-  5  (May  2002)  (Telephone  Trends  Report).  453 
 Id.  454 
 13  C.  F.  R.    121.201,  NAICS  code  513310.  455 
 Telephone  Trends  Report,  Table  5.3.  456 
 Id.  457 
 13  C.  F.  R.    121.201,  NAICS  code  513310.  458 
 Telephone  Trends  Report,  Table  5.3.  459 
 Id.  460 
 Id.  461 
 13  C.  F.  R.    121.201,  NAICS  code  513330.  462 
 Telephone  Trends  Report,  Table  5.3.  463 
 Id. 
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 the  Commission  estimates  that  the  majority  of  local  resellers  may  be  affected  by  the  rules. 
 11.  Toll  Resellers.  The  SBA  has  developed  a  specific  size  standard  for  small  businesses  within  the  category  of  Telecommunications  Resellers.  Under  that  SBA  definition,  such  a  business  is 

 small  if  it  has  1,500  or  fewer  employees.  464  According  to  the  FCC's  Telephone  Trends  Report  data,  576  companies  reported  that  they  were  engaged  in  the  provision  of  toll  resale  services.  465  Of  these  576 
 companies,  an  estimated  538  have  1,500  or  fewer  employees  and  38  have  more  than  1,500  employees.  466  Consequently,  the  Commission  estimates  that  a  majority  of  toll  resellers  may  be  affected  by  the  rules. 

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

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

 14.  Prepaid  Calling  Card  Providers.  The  SBA  has  developed  a  size  standard  for  small  businesses  within  the  category  of  Telecommunications  Resellers.  Under  that  size  standard,  such  a 
 business  is  small  if  it  has  1,500  or  fewer  employees.  473  According  to  the  FCC's  Telephone  Trends  Report  data,  32  companies  reported  that  they  were  engaged  in  the  provision  of  prepaid  calling  cards.  474  Of  these 
 32  companies,  an  estimated  31  have  1,500  or  fewer  employees  and  one  has  more  than  1,500  employees.  475  Consequently,  the  Commission  estimates  that  a  majority  of  prepaid  calling  providers  may 
 be  affected  by  the  rules. 
 464  13  C.  F.  R.    121.201,  NAICS  code  513330. 
 465  Telephone  Trends  Report,  Table  5.3. 
 466  Id. 
 467  13  C.  F.  R.    121.201,  NAICS  code  513310. 
 468  Telephone  Trends  Report,  Table  5.  3. 
 469  Id. 
 470  13  C.  F.  R.    121.201,  NAICS  code  513310. 
 471  Telephone  Trends  Report,  Table  5.3. 
 472  Id. 
 473  13  C.  F.  R.    121.201,  NAICS  code  513330. 
 474  Telephone  Trends  Report,  Table  5.3. 
 475  Id. 
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 15.  Other  Toll  Carriers.  Neither  the  Commission  nor  the  SBA  has  developed  a  specific  size  standard  for  small  entities  specifically  applicable  to  "Other  Toll  Carriers."  This  category  includes  toll 
 carriers  that  do  not  fall  within  the  categories  of  interexchange  carriers,  operator  service  providers,  prepaid  calling  card  providers,  satellite  service  carriers,  or  toll  resellers.  The  closest  applicable  size  standard 
 under  the  SBA  rules  is  for  Wired  Telecommunications  Carriers.  Under  that  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  476  According  to  the  FCC's  Telephone  Trends  Report  data,  42 
 carriers  reported  that  they  were  engaged  in  the  provision  of  "Other  Toll  Services."  477  Of  these  42  carriers,  an  estimated  37  have  1,500  or  fewer  employees  and  five  have  more  than  1,500  employees.  478 
 Consequently,  the  Commission  estimates  that  a  majority  of  Other  Toll  Carriers"  may  be  affected  by  the  rules. 

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

 E.  Steps  Taken  to  Minimize  Significant  Economic  Impact  on  Small  Entities,  and  Significant  Alternatives  Considered 
 17.  The  RFA  requires  an  agency  to  describe  any  significant  alternatives  that  it  has  considered  in  reaching  its  proposed  approach,  which  may  include  the  following  four  alternatives  (among  others):  (1) 
 the  establishment  of  differing  compliance  or  reporting  requirements  or  timetables  that  take  into  account  the  resources  available  to  small  entities;  (2)  the  clarification,  consolidation,  or  simplification  of 
 compliance  or  reporting  requirements  under  the  rule  for  small  entities;  (3)  the  use  of  performance,  rather  than  design  standards;  and  (4)  an  exemption  from  coverage  of  the  rule,  or  any  part  thereof,  for  small 
 entities.  479 
 18.  Third  Party  Verification.  The  Commission  is  considering  additional  requirements  which  would  address  issues  we  have  seen  in  the  enforcement  of  our  slamming  rules,  and  we  therefore  seek 
 comment  on  the  need  for  additional  minimum  requirements  for  third  party  verification  calls  and  of  the  impact  of  any  additional  requirements  on  small  entities.  We  especially  seek  information  addressing  the 
 possible  financial  impact  on  smaller  carriers. 

 F.  Federal  Rules  that  May  Duplicate,  Overlap,  or  Conflict  with  the  Proposed  Rules 
 19.  None. 

 476  13  C.  F.  R.    121.201,  NAICS  code  513310. 
 477  Telephone  Trends  Report,  Table  5.3. 
 478  Id. 
 479  5  U.  S.  C.    603(  c). 
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 Appendix  D 
 Petitioners  AT&  T  Corp.  (Petitions  filed  on  April  2,  2001,  and  March  18,  1999). 
 National  Telephone  Cooperative  Association  (NTCA)  Rural  LECs 
 SBC  Communications  Sprint  Corporation  (Petitions  filed  on  April  2,  2001,  Sept.  5,  2000,  and  March  18,  1999). 
 VoiceLog,  LLC  WorldCom  (Petitions  filed  April  2,  2001,  and  Sept.  5,  2000). 

 Commenters  Ameritech 
 Association  of  Communications  Enterprises  (ASCENT),  formerly  Telecommunications  Resellers  Association  (TRA) 
 AT&  T  Corp.  Bell  Atlantic 
 BellSouth  Buyers  Online 
 Cable  &  Wireless  Cox  Communications 
 Erbia  Network  Excel 
 Fionda  GTE 
 Hughes  Telecom  IDS  Telecom 
 John  Ring  Enterprises  Long  Distance  Post 
 PromiseVision  Qwest 
 SaveTel  Communications  SBC  Communications 
 Sprint  Corporation  Telephone  Company  of  Central  Florida 
 TCM  Communications  Telecom  New  Zealand 
 USTA  US  West 
 Velocity  Networks  of  Kentucky  Verizon 
 WorldCom 
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