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 Federal  Communications  Commission  FCC  99-  72 
 Before  the  FEDERAL  COMMUNICATIONS  COMMISSION 
 Washington,  D.  C.  20554 
 [CORRECTED  VERSION] 


 In  the  Matter  of  )  ) 
 Truth-  in-  Billing  )  CC  Docket  No.  98-  170  and  ) 
 Billing  Format  ) 


 FIRST  REPORT  AND  ORDER  AND  FURTHER  NOTICE  OF  PROPOSED  RULEMAKING 
 Adopted:  April  15,  1999  Released:  May  11,  1999 
 Comment  Date:  14  days  from  Federal  Register  publication  for  comments  concerning  standardized  labels  for  charges  relating  to  federal  regulatory  action;  30  days  from  Federal 
 Register  publication  for  comments  concerning  applicability  of  truth-  in-  billing  principles  and  guidelines  to  Commercial  Mobile  Radio  Service  (CMRS)  carriers 
 Reply  Date:  21  days  from  Federal  Register  publication  for  comments  concerning  standardized  labels  for  charges  relating  to  federal  regulatory  action;  45  days  from  Federal  Register  publication 
 for  comments  concerning  applicability  of  truth-  in-  billing  principles  and  guidelines  to  CMRS  carriers 


 By  the  Commission:  Commissioner  Ness  issuing  a  statement,  Commissioner  Powell  concurring  and  issuing  a  statement,  and  Commissioner  Furchtgott-  Roth  dissenting  and  issuing  a  statement. 
 Table  of  Contents 
 I.  THE  IMPORTANCE  OF  CLEAR  AND  INFORMATIVE  BILLS  IN  COMPETITIVE  TELECOMMUNICATIONS  MARKETS...............................................  1 


 II.  TRUTH-  IN-  BILLING  PRINCIPLES..................................................................................  9  A.  Adoption  of  Guidelines................................................................................................................  9 
 B.  Legal  Authority..................................................................................................................  20  C.  Specific  Truth-  In-  Billing  Guidelines  .......................................................................................  28 
 1.  Clear  Organization  and  Highlighting  New  Service  Provider  .......................  2.  Full  and  Non-  Misleading  Billed  Charges  .......................................................................  37 
 a.  Billing  Descriptions  ...................................................................................  38  b.  "Deniable"  and  "Non-  Deniable"  Charges..................................................  44 
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 c.  Descriptions  of  Charges  Resulting  From  Federal  Regulatory  ..........  3.  Clear  and  Conspicuous  Disclosure  of  Inquiry  Contacts  .....................................  65 
 III.  FURTHER  NOTICE  OF  PROPOSED  RULEMAKING  ....................................................  68  A.  Discussion..............................................................................................................  68 
 1.  Application  of  Rules  to  CMRS  Carriers  ....................................................  68  2.  Standard  Labels  for  Line-  Item  Charges.....................................................  71 
 IV.  PROCEDURAL  MATTERS  .............................................................................................  72  A.  Final  Regulatory  Flexibility  Analysis....................................................................  72 
 1.  Need  for  and  Objectives  of  this  Order  and  the  Rules  Adopted  Herein...............  73  2.  Summary  of  the  Significant  Issues  Raised  by  the  Public  Comments  in  Response 
 to  the  IRFA  ................................................................................................  74  3.  Description  and  Estimates  of  the  Number  of  Small  Entities  to  Which  the  Rules 
 Adopted  in  the  Order  in  CC  Docket  No.  98-  170  May  Apply....................  78  4.  Summary  of  Projected  Reporting,  Recordkeeping  and  other  Compliance 
 Requirements  ...........................................................................................  101  5.  Steps  Taken  to  Minimize  the  Significant  Economic  Impact  of  This  Order  on 
 Small  Entities  and  Small  Incumbent  LECs,  Including  the  Significant  Alternatives  Considered...........................................................................  102 
 B.  Final  Paperwork  Reduction  Act  of  1995  Analysis  ..............................................  104  C.  Initial  Regulatory  Flexibility  Analysis  for  Policies  Proposed  in  the  Further  Notice  ..  105 
 D.  Initial  Paperwork  Reduction  Act  of  1995  Analysis  for  the  Further  Notice  .........  112  E.  Comment  Filing  Procedure  ..................................................................................  113 
 F.  Further  Information..............................................................................................  117 
 V.  ORDERING  CLAUSES  .....................................................................................................  119  APPENDIX  A  Final  Rules 
 APPENDIX  B  List  of  Commenters 
 I.  THE  IMPORTANCE  OF  CLEAR  AND  INFORMATIVE  BILLS  IN  COMPETITIVE  TELECOMMUNICATIONS  MARKETS 


 1.  In  this  Order,  we  undertake  common-  sense  steps  to  ensure  that  consumers  are  provided  with  basic  information  they  need  to  make  informed  choices  in  a  competitive 
 telecommunications  marketplace,  while  at  the  same  time  protecting  themselves  from  unscrupulous  competitors.  We  believe  that  the  "truth-  in-  billing"  principles  adopted  herein  will 
 significantly  further  consumers'  opportunity  to  reap  fully  the  benefits  envisioned  by  the  Telecommunications  Act  of  1996  (1996  Act),  which  amended  the  Communications  Act  of  1934 
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 (Act).  1 
 2.  By  the  1996  Act,  Congress  intended  to  facilitate  the  introduction  by  private  firms  of  new  consumer  services,  service  providers  and  technologies  by  promoting  the  development  of 
 competition  and  deregulation  in  all  telecommunications  markets.  2  The  Act  instructs  the  Commission  and  state  public  utility  commissions  to  open  telecommunications  markets  to 
 competition  and  to  reform  universal  service  support  mechanisms  to  ensure  their  consistency  with  competitive  markets.  The  proper  functioning  of  competitive  markets,  however,  is  predicated  on 
 consumers  having  access  to  accurate,  meaningful  information  in  a  format  that  they  can  understand.  Unless  consumers  are  adequately  informed  about  the  service  choices  available  to 
 them  and  are  able  to  differentiate  among  those  choices,  they  are  unlikely  to  be  able  fully  to  take  advantage  of  the  benefits  of  competitive  forces. 


 3.  Unfortunately,  as  a  by-  product  of  these  changes,  we  also  have  seen  growing  consumer  confusion  concerning  the  provision  of  these  services  and  an  increase  in  the  number  of 
 entities  willing  to  take  advantage  of  this  confusion.  3  The  most  glaring  manifestations  of  consumer  confusion  may  be  the  dramatic  growth  in  the  number  of  slamming  and  cramming 
 complaints  received  by  the  Commission  and  the  states.  4  As  we  explained  in  the  Notice  of  Proposed  Rulemaking  (Notice)  in  this  proceeding,  5  our  review  of  the  complaints  received  by  this 


 1  Telecommunications  Act  of  1996,  Pub.  L.  No.  104-  104,  110  Stat.  56  (1996). 
 2  The  principal  goal  of  the  Act  is  to  "provide  for  a  pro-  competitive,  deregulatory  national  policy  framework 
 designed  to  accelerate  rapidly  private  sector  deployment  of  advanced  telecommunications  and  information  technologies  and  services  to  all  Americans  by  opening  all  telecommunications  markets  to  competition."  See  Joint 


 Statement  of  Managers,  S.  Conf.  Rep.  No.  104-  230,  104th  Cong.,  2d  Sess.  Preamble  (1996)  (Joint  Explanatory  Statement). 


 3  See,  e.  g.,  NCL  comments  at  2-  3  (noting  that  unscrupulous  companies  take  advantage  of  consumer  confusion 
 over  phone  bills,  and  that  fraud  is  increasing). 
 4  Slamming  occurs  when  a  company  changes  a  subscriber's  carrier  selection  without  that  subscriber's 
 knowledge  or  explicit  authorization.  Cramming  refers  to  the  practice  of  causing  unauthorized,  misleading,  or  deceptive  charges  to  be  placed  on  consumers'  telephone  bills.  Notice,  13  FCC  Rcd  at  18177-  78.  In  1998,  our 


 Common  Carrier  Bureau  Enforcement  Division  processed  20,154  complaints  of  slamming  and  4,558  complaints  of  cramming.  We  received  8,761  slamming  complaints  in  1995,  12,795  in  1996,  and  20,475  in  1997.  Prior  to  1998, 
 the  Commission  did  not  track  cramming  complaints.  Consumer  Complaints  and  Inquiries,  Consumer  Protection  Branch,  Enforcement  Division,  Common  Carrier  Bureau,  Federal  Communications  Commission  (Oct.  31,  1998). 
 The  Federal  Trade  Commission  (FTC)  states  it  received  9,000  cramming  complaints  in  the  12  month  period  prior  to  filing  its  comments  in  this  proceeding.  FTC  comments  at  5.  State  commissions  also  have  received  thousands  of 
 complaints.  See,  e.  g.,  Vermont  comments  at  8. 
 5  Truth-  in-  Billing  and  Billing  Format,  Notice  of  Proposed  Rulemaking,  CC  Docket  No.  98-  170,  13  FCC  Rcd 
 18176  (1998). 
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 Commission  plainly  demonstrates  that  the  difficulty  consumers  experience  in  trying  to  understand  their  bills  for  telecommunications  service  has  been  a  significant,  contributing  factor 
 in  the  growth  of  these  fraudulent  activities.  The  comments  in  this  proceeding  reinforce  this  conclusion.  6  Beyond  these  frauds,  however,  we  have  seen  a  substantial  rise  in  the  number  of 
 complaints  generally  arising  out  of  consumers'  confusion  concerning  charges  on  their  telephone  bills.  7  Since,  for  most  consumers,  the  monthly  telephone  bill  is  their  primary  source  of 
 information  and  point  of  contact  with  respect  to  their  telecommunications  services  providers,  these  complaints  are  strong  evidence  that  consumers  are  not  getting  necessary  information  in  a 
 format  that  allows  them  to  make  informed  choices  in  this  market.  8  Indeed,  it  is  apparent  from  our  review  of  consumer  complaints  that,  while  the  nature  and  variety  of  the  services  charged  on 
 consumers'  telephone  bills  have  changed  dramatically  in  recent  years,  the  format  of  the  bills  themselves  have  remained  largely  unchanged  since  the  court  ordered  divestiture  of  the  Bell 
 System  in  1983.  9 
 4.  Nor  are  we  alone  in  this  concern.  Virtually  every  state  and  consumer  advocacy  group  that  commented  in  this  proceeding  urges  us  to  take  action  to  address  the  growing  problem 


 6  See,  e.  g.,  Missouri  Commission  comments  at  5  (statistics  of  National  Fraud  Information  Center  show  use 
 phone  bill  is  a  "preferred"  method  for  "con  artists"  seeking  to  defraud  consumers).  See  also  TCA  comments  at  2  (telecommunications  fraud  "a  growth  industry"  in  Texas);  Georgia  comments  at  2  (complaints  of  slamming  and 


 cramming  far  outnumber  all  other  types  of  telecommunications  complaints  Georgia  receives);  NYCPB  comments  at  5  (companies  engaged  in  cramming  rely  on  consumer  confusion  over  bills  to  encourage  consumers  to  pay  for 
 services  that  they  have  not  authorized);  FTC  comments  at  3,  6  (unclear  telephone  bills  have  led  to  a  proliferation  of  cramming,  and  LEC  anti-  cramming  voluntary  guidelines  do  not  obviate  the  need  for  additional  consumer 
 safeguards);  CompTel  comments  at  3  (confusing  and  unclear  local  telephone  bills  create  opportunity  for  unscrupulous  carriers  to  take  advantage  of  consumers). 


 7  See,  e.  g.,  Vermont  Commission  comments  at  8  (state  and  federal  regulators  have  received  "literally 
 thousands"  of  complaints  and  inquiries  suggesting  many  consumers  are  confused  about  the  nature  of  charges  contained  on  their  telephone  bills);  TOPC  comments  at  3  (sixty  percent  of  the  calls  that  agency  receives  involve 


 complaints  about  telephone  billing);  Bills  Project  comments  at  1  (due  to  the  "complexity  and  inscrutability  of  consumers'  bills"  many  billing  errors  brought  to  Bills  Project's  attention  went  undetected  for  significant  periods  of 
 time  before  consumers  noticed  them  and  complained). 
 8  NASUCA  notes  that,  when  fraud  is  discovered,  consumers  remain  greatly  disadvantaged  when  disputing 
 unauthorized  charges  because  bills  often  lack  vital  information,  such  as  the  name,  address,  and  telephone  number  of  the  service  provider.  NASUCA  comments  at  9. 


 9  See,  e.  g.,  USTA  comments  at  5;  Qwest  comments  at  6-  7  (discussing  "legacy"  billing  systems).  "Legacy" 
 system  refers  to  a  non-  standard  or  proprietary,  typically  older,  computer  system  that  cannot  easily  be  upgraded  and  is  incompatible  with  other  computer  systems.  The  breakup  of  the  Bell  System  is  described  in  United  States  v. 


 Western  Elec.  Co.,  569  F.  Supp.  1057  (D.  D.  C.  1983),  aff'd  sub  nom.  California  v.  United  States,  464  U.  S.  1013  (1983). 
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 of  consumer  confusion  with  their  telephone  bills.  10  Similarly,  our  colleagues  at  the  Federal  Trade  Commission  assert  that  intervention  on  our  part  is  necessary  to  help  consumers  avoid 
 "falling  prey"  to  unscrupulous  service  providers  who  hide  or  mislabel  unauthorized  charges  on  consumers'  telephone  bills.  11  Several  members  of  Congress  also  have  identified  consumer 
 confusion  with  their  telephone  bills  as  a  growing  concern  that  should  be  addressed  by  this  Commission.  12 


 5.  Accordingly,  in  this  Order,  we  adopt  generally  the  "truth-  in-  billing"  principles  proposed  in  the  Notice  in  order  to  ensure  that  consumers  receive  thorough,  accurate,  and 
 understandable  bills  from  their  telecommunications  carriers.  Specifically,  we  will  require: 
 First,  that  consumer  telephone  bills  be  clearly  organized,  clearly  identify  the  service  provider,  and  highlight  any  new  providers; 


 Second,  that  bills  contain  full  and  non-  misleading  descriptions  of  charges  that  appear  therein;  and, 
 Third,  that  bills  contain  clear  and  conspicuous  disclosure  of  any  information  the  consumer  may  need  to  make  inquiries  about,  or  contest  charges,  on  the  bill. 
 Additionally,  we  adopt  minimal,  basic  guidelines  that  explicate  carriers'  binding  obligations  pursuant  to  these  broad  principles.  These  principles  and  guidelines  are  designed  to  prevent  the 
 types  of  consumer  fraud  and  confusion  evidenced  in  the  tens  of  thousands  of  complaints  we  have  received.  13  Moreover,  we  believe  that  they  represent  fundamental  principles  of  fairness  to 


 10  See,  e.  g.,  Small  Business  comments  at  1-  2;  NCL  comments  at  2;  NAAG  comments  at  3;  Bills  Project 
 comments  at  1-  2;  West  Virginia  Commission  comments  at  1;  Vermont  Commission  comments  at  3-  4;  Washington  Commission  Staff  comments  at  2;  California  Commission  comments  at  2;  Maine  Commission  comments  at  2; 


 Minnesota  OAG  comments  at  4;  TCA  comments  at  2  (absent  billing  and  formatting  reforms,  consumers  will  remain  unable  to  discern  legitimate  services  and  charges  from  fraudulent  cramming  and  slamming);  UCAN  comments  at  1- 
 3;  NASUCA  comments  at  7-  8.  See  also  NYCPB  comments  at  3,  6  (favoring  non-  binding  guidelines);  Missouri  Commission  comments  at  2  (same);  Florida  Commission  comments  at  4  (Commission  should  act  as  national  forum 
 and  adopt  model  procedures  which  states  can  use  to  develop  their  own  truth-  in-  billing  rules). 
 11  FTC  comments  at  3. 


 12  See,  e.  g.,  Cramming:  An  Emerging  Telephone  Billing  Fraud,  Hearing  Before  the  Permanent  Subcommittee 
 on  Investigations  of  the  Senate  Committee  on  Governmental  Affairs,  S.  Hrg.  105-  646,  105th  Cong.,  2d.  Sess.  (1998)  (opening  statements). 


 13  State  commissions  and  the  FTC  also  have  received  thousands  of  complaints.  See,  e.  g.,  FTC  comments  at  5; 
 Vermont  Commission  comments  at  8.  See  also  NASUCA  reply  at  2  (complaints  received  by  FCC  represent  "tip  of  the  iceberg"). 
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 consumers  and  just  and  reasonable  practices  by  carriers.  14 
 6.  In  taking  action  today,  we  recognize  that,  at  this  time,  competitive  pressures  alone  do  not  ensure  that  consumers  receive  clear,  informative  and  consumer-  friendly  telephone  bills 
 from  certain  carriers.  We  acknowledge,  for  example,  that  most  consumers  continue  to  have  both  their  local  and  long  distance  service  billed  together  by  their  local  exchange  company  (and, 
 indeed,  consumers  have  generally  expressed  a  preference  for  a  single  bill),  and  most  consumers  do  not  yet  have  significant  choice  in  who  they  select  as  a  provider  of  local  service.  15  We 
 certainly  hope  that,  as  competition  develops  for  the  provision  of  local  telephone  service,  all  carriers,  including  those  upon  which  we  impose  requirements  here  will  seek  to  distinguish  their 
 services  by  providing  clear,  informative,  and  accessible  bills  to  their  customers.  Moreover,  by  implementing  these  principles  through  broad,  binding  guidelines  as  described  more  fully  below, 
 we  allow  carriers  considerable  discretion  to  satisfy  their  obligations  in  a  manner  that  best  suits  their  needs  and  those  of  their  customers.  Thus,  carriers  that  wish  to  distinguish  themselves 
 through  creative  and  consumer-  friendly  billing  formats  have  wide  latitude  to  compete  in  this  manner  (i.  e.,  by  producing  bills  on  8  x  11  inch  paper).  16 


 7.  Even  in  competitive  markets,  however,  disclosure  rules  are  needed  to  protect  consumers.  17  Indeed,  our  adoption  of  these  truth-  in-  billing  principles  is  in  large  part  designed  to 
 bring  to  consumers  some  of  the  protections  to  which  they  would  be  entitled  if  these  services  were  billed  in  the  same  manner  as  other  credit  purchases.  18  For  example,  the  Truth  in  Lending 


 14  47  U.  S.  C.    201(  b)  (common  carrier  practices  and  charges  must  be  "just  and  reasonable"). 
 15  See,  e.  g.,  Local  Competition,  Industry  Analysis  Division,  Common  Carrier  Bureau,  Federal  Communications 
 Commission  (Dec.  1998)  at  9. 
 16  Our  principles  and  guidelines  are  broad  enough  to  allow  carriers  to  continue  to  differentiate  themselves 
 from  their  competitors  based  on  their  billing  practices,  and  accordingly,  we  disagree  with  GTE  and  ALTS,  who  argue  that  truth-  in-  billing  requirements  could  take  away  the  competitive  edge  of  carriers  who  already  possess 


 consumer-  friendly  bills.  See,  e.  g.,  GTE  comments  at  9;  ALTS  comments  at  5. 
 17  TOPC  reply  at  3.  Because  mature  markets  also  require  disclosure  rules,  we  disagree  with  ALTS'  argument 
 that  any  confusion  over  billing  formats  that  exists  today  is  merely  the  result  of  the  transition  to  fully  competitive  telecommunications  markets.  See  ALTS  comments  at  3. 


 18  We  note  that,  to  some  degree,  it  is  significantly  easier  to  bill  fraudulent  charges  on  telephone  bills  than  on 
 credit  card  bills.  While  credit  card  charges  require  access  to  a  customer  account  number  that  consumers  understand  should  be  treated  confidentially,  all  that  is  often  required  to  get  a  charge  billed  on  a  local  telephone  bill  is  the 


 consumer's  telephone  number.  This  number  is  not  only  expected  to  be  widely  distributed,  but  can  easily  be  "captured"  by  an  entity  even  when  the  consumer  has  not  authorized  charges  or  made  a  purchase.  See  Policies  and 
 Rules  Governing  Interstate  Pay-  Per-  Call  and  Other  Information  Services  Pursuant  to  the  Telecommunications  Act  of  1996,  Order  and  Notice  of  Proposed  Rulemaking,  CC  Docket  No.  96-  146,  11  FCC  Rcd  14738,  14741  (1996) 
 (noting  that  automatic  number  identification  has  been  used  to  charge  telephone  subscribers  for  calls  to  toll-  free 
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 Act  (TILA)  and  implementing  rules  require  credit  card  issuers  to  provide  information  concerning  the  amount  and  date  of  each  transaction  appearing  on  a  bill,  the  seller's  name,  and  the  location 
 where  the  transaction  took  place.  19  These  requirements  are  intended  to  "protect  the  consumer  against  inaccurate  and  unfair  billing  and  credit  card  practices."  20  In  a  similar  manner,  our 
 principles  and  guidelines  will  protect  consumers  from  misleading  and  inaccurate  billing  practices. 


 8.  In  sum,  we  take  this  action  in  furtherance  of  the  pro-  competitive  goals  of  the  1996  Act  and  our  responsibility  to  ensure  that  all  consumers  have  a  fair  opportunity  to  share  in  the 
 benefits  of  competitive  telecommunications  markets.  Certainly,  in  a  competitive  marketplace,  consumers  should  investigate  the  choices  available  to  them  and  decide  which  services  best  fit 
 their  needs.  They  also  have  a  responsibility  to  be  vigilant  in  protecting  themselves  from  perpetrators  of  fraud.  In  this  item,  we  seek  to  provide  consumers  with  the  basic  tools  they  need 
 to  participate  meaningfully  in  a  competitive  telecommunications  marketplace. 
 II.  TRUTH-  IN-  BILLING  PRINCIPLES 
 A.  Adoption  of  Guidelines 
 9.  Through  this  Order,  we  adopt  broad,  binding  principles  to  promote  truth-  in-billing,  rather  than  mandate  detailed  rules  that  would  rigidly  govern  the  details  or  format  of 
 carrier  billing  practices.  The  majority  of  commenters  in  this  proceeding  support  such  a  flexible  approach.  21  We  use  the  terms  principles  and  guidelines  in  this  Order  to  distinguish  our  approach 
 from  a  more  detailed  regulatory  approach  urged  by  some  commenters.  That  is,  we  envision  that  carriers  may  satisfy  these  obligations  in  widely  divergent  manners  that  best  fit  their  own  specific 


 numbers). 
 19  See,  e.  g.,  TILA,  15  U.  S.  C.  1601,  et  seq.,  12  C.  F.  R.    226.  Congress  passed  TILA  to  ensure  that  consumers 
 are  given  meaningful  information  about  credit  transactions  and  to  create  important  protections  for  consumers  using  credit  card  billing  and  collections  systems.  FTC  comments  at  4-  5. 


 20  15  U.  S.  C.    1601. 
 21  States  and  consumer  groups  are  generally  supportive  of  our  efforts.  See,  e.  g.,  Small  Business  comments  at 
 1-  2;  Bills  Project  comments  at  1-  2;  NCL  comments  at  2;  West  Virginia  Commission  comments  at  1;  Vermont  Commission  comments  at  1-  2;  Washington  Commission  Staff  comments  at  2;  NAAG  comments  at  3;  California 


 Commission  comments  at  2;  Maine  Commission  comments  at  2;  Minnesota  OAG  comments  at  4;  TCA  comments  at  2.  See  also  NYCPB  comments  at  3,  6  (supporting  voluntary  guidelines);  Missouri  Commission  comments  at  2 
 (same);  Florida  Commission  comments  at  4  (urging  this  Commission  to  issue  model  rules  for  states  to  enact).  Most  carriers  oppose  rules,  but  state  that,  if  the  Commission  determines  to  act,  we  should  do  so  in  the  form  of  broad 
 guidelines  that  carriers  may  comply  with  in  a  number  of  different  ways.  See,  e.  g.,  USTA  comments  at  3,  8;  TRA  comments  at  3;  U  S  West  comments  at  5. 
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 needs  and  those  of  their  customers.  We  incorporate  these  principles  and  guidelines  into  the  Commission's  rules,  because  we  intend  for  these  obligations  to  be  enforceable  to  the  same  degree 
 as  other  rules.  Thus,  while  we  provide  carriers  flexibility  in  their  compliance,  we  fully  expect  them  to  meet  their  obligation  to  provide  consumers  with  the  accurate  and  meaningful 
 information  contemplated  by  these  principles. 
 10.  Our  decision  to  adopt  broad,  binding  principles,  rather  than  detailed,  comprehensive  rules,  reflects  a  recognition  that  there  are  typically  many  ways  to  convey 
 important  information  to  consumers  in  a  clear  and  accurate  manner.  For  this  reason,  we  disagree  with  those  commenters  who  assert  that  more  prescriptive  rules  are  necessary  to  combat  consumer 
 fraud  through  the  use  of  misleading  telephone  bills.  22  Instead,  our  principles  provide  carriers  flexibility  in  the  manner  in  which  they  satisfy  their  truth-  in-  billing  obligations.  Accordingly,  this 
 approach  responds  to  the  concerns  of  many  carriers  that  detailed  regulations  could  increase  their  costs,  23  and  that  rigid  rules  might  prevent  competing  carriers  from  differentiating  themselves  on 
 the  basis  of  the  clarity  of  their  bills.  24 
 11.  Conversely,  we  disagree  with  commenters  who  suggest  that  purely  voluntary  guidelines  would  be  sufficient  to  combat  misleading  bills  that  facilitate  slamming  and 
 cramming.  25  The  extent  of  the  current  problem  shows  that  voluntary  action  alone  is  inadequate  for  many  carriers.  Failure  to  codify  these  principles  and  implementing  guidelines  might  result  in 
 carriers  ignoring  our  requirements,  to  the  detriment  of  consumers.  Our  Order  permits  carriers  to  render  bills  using  the  format  of  their  choice,  so  long  as  the  bills  comply  with  the  implementing 
 guidelines  that  we  adopt  today.  We  consider  our  principles  and  guidelines  to  be  flexible  enough  that  carriers  will  be  able  to  comply  with  them  without  incurring  unnecessary  expense.  In  fact, 
 we  note  that  many  carriers  commented  that  their  current  practices  already  comport  with  proposals  we  outlined  in  the  Notice.  26  Although  complying  with  these  principles  certainly  may 
 require  expenditures  by  some  carriers  whose  bills  currently  do  not  meet  these  standards,  we  conclude  that  such  costs  do  not  outweigh  the  benefits  consumers  will  reap  from  better 


 22  See,  e.  g.,  NASUCA  comments  at  21. 
 23  ALTS  comments  at  7;  MCI  comments  at  4. 
 24  See,  e.  g.,  GTE  comments  at  9;  ALTS  comments  at  5.  We  also  find  that  this  flexibility  addresses  the 
 concerns  expressed  by  CompTel  that  adoption  of  rules  could  make  bills  longer  and  more  complex.  CompTel  comments  at  6.  Concise  bills  are  more  likely,  not  less  likely,  to  comport  with  our  principles  that  bills  be  clear  and 


 understandable  because  excessively  long  bills  may  confuse  consumers. 
 25  NYCPB  comments  at  7  n.  3. 


 26  See,  e.  g.,  Ameritech  comments  at  13;  BellSouth  comments  at  4;  SBC  comments  at  4  (all  noting  that  their 
 bills  already  segregate  charges  by  service  provider). 
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 understanding  their  service  charges.  Particularly  in  light  of  the  flexibility  we  provide  carriers  to  satisfy  these  guidelines,  we  find  that  the  comments  do  not  provide  any  detailed  information  by 
 which  we  could  make  such  a  finding.  27  Accordingly,  we  conclude  that  the  approach  we  adopt  today  appropriately  balances  the  rights  of  consumers  and  the  concerns  of  carriers,  in  furtherance 
 of  the  deregulatory  thrust  of  the  1996  Act,  and  we  decline  to  accept  the  assertions  of  some  rural  and  other  carriers  that  compliance  will  be  too  costly  for  such  carriers.  28 


 12.  As  we  conclude  in  section  II.  B.,  infra,  the  ability  of  consumers  to  read  and  understand  their  bills  is  crucial  to  their  ability  to  protect  themselves  against  slamming.  We  note, 
 however,  that  some  consumers  with  disabilities  may,  due  to  the  nature  of  their  disability,  be  unable  to  read  and  understand  their  telephone  bills  if  they  do  not  have  the  ability  to  receive  their 
 bills  in  accessible  formats.  Persons  with  disabilities,  therefore,  due  to  barriers  in  standard  billing  formats,  may  not  be  able  to  determine  whether  their  interexchange  carrier  has  been  changed 
 without  their  authorization.  In  this  Order,  we  are  not  setting  forth  requirements  that  carriers  provide  their  bills  in  accessible  formats  for  persons  with  disabilities.  We  note,  however,  that  the 
 issue  of  access  to  telecommunications  service  bills  will  be  addressed  in  the  pending  rulemaking  underway  to  implement  section  255  of  the  Act.  Section  255  states  that  providers  of 
 telecommunications  services  and  manufacturers  of  telecommunications  equipment  must  make  their  services  and  equipment  "accessible  to  and  usable  by"  persons  with  disabilities  if  readily 
 achievable.  Billing  would  appear  to  be  included  in  the  usability  requirements  of  section  255.  We  believe  that  the  section  255  proceeding  is  a  more  appropriate  place  to  address  the  issue  of 
 accessibility  to  telecommunications  service  bills.  In  the  meantime,  however,  we  strongly  encourage  carriers  to  provide  billing  information  in  accessible  formats  for  their  customers  with 
 disabilities  upon  request,  so  that  those  customers  may  effectively  understand  their  bills  and  protect  themselves  against  unauthorized  carrier  changes.  Of  course,  carriers  also  are  expected  to 
 comply  with  any  existing  state  requirements  regarding  accessibility  of  telecommunications  services  and  related  bills. 


 27  Several  wireless  industry  commenters  provided  specific  cost  estimates,  but  only  for  implementation  of 
 proposals  mentioned  in  the  Notice,  such  as  requiring  separate  status  pages,  that  we  do  not  adopt.  See  e.  g.,  GTE  comments  at  11  (cost  of  mailing  an  additional  page  of  wireless  bill  would  add  $9.  6  million  per  year);  BellSouth 


 comments  at  15  (one  additional  page  on  wireless  bill  would  cost  between  $500,000  and  $1  million  for  programming  costs,  resulting  in  7  cent  per  customer  per  month  charge);  Bell  Atlantic  Mobile  reply  at  8  ($  5  million  in  systems 
 development  work  to  add  separate  page  to  highlight  any  changes  form  prior  billing  period  and  to  provide  a  visual  separation  of  difference  services  organized  by  provider.) 


 28  In  fact,  according  to  telecommunications  consulting  firm  Detecon,  although  telephone  bill  format  rules 
 might  cause  carrier  costs  to  increase  in  the  short  term,  our  rules  ultimately  may  reduce  carriers'  costs.  Detecon  contends  that  costs  incurred  by  carriers  to  implement  our  rules  ultimately  will  be  offset  by  cost  savings  resulting 


 from  quicker  collection  of  revenues,  because  bills  issued  pursuant  to  rules  requiring  clear  telephone  bill  formats  are  less  likely  to  be  disputed.  This  will  reduce  the  amount  of  calls  to  customer  service  representatives,  resulting  in 
 lower  staffing  costs.  Detecon  comments  at  2. 
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 13.  Commercial  Mobile  Radio  Service  (CMRS)  Carriers.  We  believe  that  the  broad  principles  we  adopt  to  promote  truth-  in-  billing  should  apply  to  all  telecommunications  carriers, 
 both  wireline  and  wireless.  The  principles  we  adopt  today  represent  fundamental  statements  of  fair  and  reasonable  practices.  Like  wireline  carriers,  wireless  carriers  also  should  be  fair,  clear, 
 and  truthful  in  their  billing  practices.  Consumers  deserve  no  less. 
 14.  We  therefore  reject  the  threshold  arguments  that  certain  classes  of  carriers  should  be  wholly  exempted  from  complying  with  the  guidelines  that  we  announce  today  solely  because 
 competition  exists  in  the  markets  in  which  they  operate.  29  We  emphasize  that  one  of  the  fundamental  goals  of  our  truth-  in-  billing  principles  is  to  provide  consumers  with  clear,  well-organized, 
 and  non-  misleading  information  so  that  they  may  be  able  to  reap  the  advantages  of  competitive  markets.  We  anticipate  that,  as  competition  evolves  and  convergence  occurs, 
 wireless  carriers  will  increasingly  compete  for  wireline  customers.  In  a  world  of  bundled  packages  and  multiple  service  providers,  clear  and  truthful  bills  are  paramount. 


 15.  As  we  stated  above,  however,  we  reject  the  detailed  regulatory  approach  urged  by  some  commenters,  because  we  envision  that  carriers  may  satisfy  these  obligations  in  widely 
 divergent  manners  that  best  fit  their  own  specific  needs  and  those  of  their  customers.  Nonetheless,  in  the  wireline  context,  we  incorporated  these  principles  and  guidelines  into 
 Commission  rules  for  enforcement  purposes.  We  have  adopted  these  rules  after  considering  an  extensive  record  on  both  the  nature  and  volume  of  customer  complaints,  as  well  as  substantial 
 information  about  wireline  billing  practices. 
 16.  The  record  does  not,  however,  reflect  the  same  high  volume  of  customer  complaints  in  the  CMRS  30  context,  nor  does  the  record  indicate  that  CMRS  billing  practices  fail 
 to  provide  consumers  with  the  clear  and  non-  misleading  information  they  need  to  make  informed  choices.  If  current  CMRS  billing  practices  are  clear  and  non-  misleading  to  consumers,  then  it 
 might  be  appropriate  either  to  forbear  from  specific  wireline  rules  or  not  to  apply  them  in  the  first  instance.  Furthermore,  in  some  instances,  the  rules  we  have  adopted  might  simply  be 
 inapplicable  in  the  wireless  context.  For  example,  because  CMRS  carriers  are  excluded  from  equal  access  obligations,  31  it  appears  that  CMRS  carriers  will  seldom  need  to  indicate  a  new  long 


 29  See,  e.  g.,  C&  W  comments  at  3;  AT&  T  comments  at  4-  5;  TRA  comments  at  5;  MCI  comments  at  5  (rules 
 should  apply  only  to  bills  rendered  by  LECs  and  not  to  IXC  direct  billing). 
 30  See  47  C.  F.  R.    20.9  (enumerating  classes  of  CMRS  providers).  Requirements  established  for  CMRS  in 
 this  order  apply  similarly  to  providers  of  mobile  services,  as  defined  in  Section  20.7  of  the  Commission's  rules,  that  are  regulated  as  telecommunications  common  carriers. 


 31  See  Implementation  of  the  Subscriber  Carrier  Selection  Changes  Provision  of  the  Telecommunications  Act 
 of  1996  and  Policies  and  Rules  Concerning  Unauthorized  Changes  of  Consumers'  Long  Distance  Carriers,  Second 
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 distance  service  provider  on  the  bill. 
 17.  Despite  the  fact  that  some  rules  may  be  inapplicable  or  unnecessary  in  the  CMRS  context,  there  are  two  rules  that  we  think  are  so  fundamental  that  they  should  apply  to  all 
 telecommunications  common  carriers:  (1)  that  the  name  of  the  service  provider  associated  with  each  charge  be  clearly  identified  on  the  bill;  and  (2)  that  each  bill  should  prominently  display  a 
 telephone  number  that  customers  may  call  free-  of-  charge  in  order  to  inquire  or  dispute  any  charge  contained  on  the  bill.  As  a  practical  matter,  we  believe  that  most  CMRS  bills  already 
 contain  the  name  of  the  service  provider  and  a  contact  number.  Thus,  complying  with  these  obligations  should  be  neither  onerous  nor  costly.  But,  in  the  unlikely  event  that  a  CMRS  bill 
 does  not  contain  the  name  of  the  service  provider  or  a  contact  number,  we  believe  that,  at  a  minimum,  consumers  expect  and  should  receive  this  basic  information. 


 18.  We  also  intend  to  require  CMRS  carriers  to  comply  with  standardized  labels  for  charges  resulting  from  Federal  regulatory  action,  if  and  when  such  requirements  are  adopted.  As 
 a  practical  matter,  this  rule  will  not  apply  until  we  issue  an  order  that  adopts  the  standard  labels  for  federal  line-  item  charges.  We  expect  to  apply  the  same  rule  to  both  wireline  and  CMRS 
 carriers,  however,  because  we  believe  that  labels  assigned  to  charges  related  to  federal  regulatory  action  should  be  consistent,  understandable,  and  should  not  confuse  or  mislead  customers. 
 Uniform  labels  will  also  enable  customers  to  compare  such  charges  among  all  providers. 
 19.  Furthermore,  notwithstanding  our  decision  at  this  time  not  to  apply  these  several  guidelines  to  CMRS  providers,  we  note  that  such  providers  remain  subject  to  the  reasonableness 
 and  nondiscrimination  requirements  of  sections  201  and  202  of  the  Act,  and  our  decision  here  in  no  way  diminishes  such  obligations  as  they  may  relate  to  the  billing  practices  of  CMRS 
 carriers.  32 
 B.  Legal  Authority 
 20.  We  conclude  that  it  is  critical  to  the  effective  operation  of  a  competitive  telecommunications  marketplace  to  ensure  that  telephone  bills  provide  consumers  with  the 
 information  they  need  to  make  informed  telecommunications  choices,  as  well  as  the  tools  to 


 Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  CC  Docket  No.  94-  129,  FCC  98-  334  at    85  (Dec.  23,  1998)  (1998  Slamming  Order  and  Further  Notice). 
 32  See  47  U.  S.  C.    201(  b),  202.  Also  47  U.  S.  C.    332(  c)(  1)(  A).  In  our  recent  Order  declining  to  forbear 
 from  applying  sections  201and  202  of  the  Act  to  wireless  providers,  we  emphasized  that  these  sections  "codif[  y]  the  bedrock  consumer  protection  obligations  of  common  carriers  .  .  ."  Wireless  Forbearance  Order,  11  FCC  Rcd 


 16857,  16865.  We  also  noted  that  their  importance  would  increase  "as  customers  begin  to  rely  on  CMRS  as  a  partial  or  complete  substitute  for  wireline  service  .  .  ."  Id.  at  16870. 
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 protect  themselves  against  telecommunications-  related  fraud.  As  explained  in  the  Notice,  the  telephone  bill  is  an  integral  part  of  the  relationship  between  a  carrier  and  its  customer.  33  As 
 such,  the  manner  in  which  charges  and  providers  are  identified  on  the  telephone  bill  is  essential  to  consumers'  understanding  of  the  services  that  have  been  rendered,  the  charges  imposed  for 
 those  services,  and  the  entities  that  have  provided  such  services. 
 21.  Most  commenters  agree  that  we  possess,  at  minimum,  concurrent  jurisdiction  with  states  to  address  these  problems.  34  We  find  that  our  authority  to  enact  the  truth-  in-  billing 
 guidelines  set  forth  herein  stems  from  both  section  201(  b)  and  section  258  of  the  Act.  35  Section  201(  b)  requires  that  all  carrier  charges,  practices,  classifications,  and  regulations  "for  and  in 
 connection  with"  interstate  communications  service  be  just  and  reasonable,  and  gives  the  Commission  jurisdiction  to  enact  rules  to  implement  that  requirement.  36  Section  258  of  the  Act 
 further  authorizes  the  Commission  to  adopt  verification  requirements  to  deter  slamming  in  both  the  interstate  and  the  intrastate  markets.  The  Supreme  Court  has  ruled  that  section  201(  b) 
 provides  the  Commission  with  authority  to  implement  all  of  the  provisions  of  the  Act,  including  those  that  apply  to  intrastate  communications.  37  As  explained  in  detail  below,  with  the  exception 
 of  the  guideline  discussed  at  section  II(  C)(  2)(  c)  of  this  Order,  38  which  involves  standardized  labels  for  charges  relating  to  federal  regulatory  action,  the  truth-  in-  billing  principles  and 
 guidelines  adopted  herein  are  justified  as  slamming  verification  requirements  pursuant  to  section  258,  and  thus  can  be  applied  to  both  interstate  and  intrastate  services.  We  therefore  reject 
 arguments  by  ALTS  and  other  commenters  that,  as  a  threshold  matter,  authority  to  regulate  local 


 33  Notice,  13  FCC  Rcd  at  18182. 
 34  See,  e.  g.,  GTC  comments  at  10-  13  (Commission  possesses  jurisdiction  under  both  under  Title  I  and  Title  II 
 of  the  Act);  ACTA  comments  at  3-  4  (same);  BellSouth  comments  at  2  (Commission  possesses  jurisdiction  under  both  under  Title  I  and  Title  II  of  the  Act,  states  possess  concurrent  jurisdiction);  Minnesota  OAG  comments  at  3 


 (billing  constitutes  "practices  in  connection  with  communication  service"  under  201(  b),  although  Commission  jurisdiction  extends  primarily  to  interstate  toll  charges);  Billing  Coalition  comments  at  8-  10;  MCI  comments  at  21  n. 
 15  (Commission  possesses  jurisdiction  under  Section  201(  b)  to  enforce  "consumer  protection  obligations  of  common  carriers");  ELNC  comments  at  2-  3  (same);  ECA  comments  at  3-  5;  NASUCA  comments  at  12 
 (Commission  possesses  authority  to  issue  directives  to  providers  under  Title  II  of  Act  concerning  manner  in  which  charges  are  described  or  disclosed  to  customers). 


 35  See  47  U.  S.  C.    201(  b),  258.  In  addition,  section  332  of  the  Act,  47  U.  S.  C.    332,  also  provides  us  with 
 jurisdiction  to  enact  rules  concerning  CMRS  carriers. 
 36  47  U.  S.  C.    201(  b). 


 37  AT&  T  Corp.  v.  Iowa  Utils.  Bd.,  119  S.  Ct.  721  (1999). 
 38  See  infra  Section  II(  C)(  2)(  c). 
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 exchange  carrier  (LEC)  billing  practices  resides  solely  with  the  states.  39  We  recognize,  however,  that  the  standardized  label  guideline  rests  exclusively  on  our  authority  under  section  201(  b)  and 
 therefore  is  limited  to  interstate  services. 
 22.  Section  258  of  the  Act  provides  us  with  jurisdiction  to  regulate  the  billing  practices  of  interstate,  as  well  as  intrastate,  carriers  to  the  extent  that  our  regulations  serve  as  a 
 means  of  verifying  carrier  changes.  Section  258(  a)  of  the  Act  makes  it  unlawful  for  any  telecommunications  carrier  to  "submit  or  execute  a  change  in  a  subscriber's  selection  of  a 
 provider  of  telephone  exchange  service  or  telephone  toll  service  except  in  accordance  with  such  verification  procedures  as  the  Commission  shall  prescribe."  40  The  Commission  has  previously 
 concluded  that  this  provision  encompasses  both  interstate  and  intrastate  service  providers.  41  The  language  of  section  258  makes  clear  that  Congress  charged  the  Commission  with  the 
 responsibility  to  promulgate  verification  rules  to  prevent  slamming  in  both  the  interstate  and  intrastate  markets.  Pursuant  to  the  mandates  of  section  258,  in  the  1998  Slamming  Order  and 
 Notice  we  adopted  verification  procedures  and  liability  rules,  as  well  as  rules  regarding  the  administration  of  preferred  carrier  freezes,  42  in  order  to  deter  the  incidence  of  slamming  by  both 
 interstate  and  intrastate  carriers.  43  Importantly,  in  the  1998  Slamming  Order  and  Notice  we  also  stated  that  our  slamming  rules  are  intended  to  establish  a  new  comprehensive  framework,  in 
 accordance  with  the  provisions  of  section  258,  to  combat  aggressively  and  deter  slamming  in  the  future.  44 


 23.  The  truth-  in-  billing  guidelines  we  adopt  in  this  Order  are  intended  to  function  as  a 
 39  See,  e.  g.,  ALTS  comments  at  2  n.  2  (stating  that  the  Commission  has  no  jurisdiction  to  adopt  rules  relating 
 to  billing  of  intrastate  services);  Ameritech  comments  at  4  (stating  that  the  Commission  does  not  have  jurisdiction  over  intrastate  bills  except  for  pay-  per-  call  services);  AT&  T  comments  at  11  n.  8  (stating  that  the  Commission's 


 jurisdiction  likely  only  extends  to  billing  of  interstate  telecommunications  services);  Bell  Atlantic  comments  at  Attachment,  "Answers  to  Specific  Questions,"  at  2  (stating  that  the  Commission  lacks  jurisdiction  over  charges  for 
 intrastate  telecommunications  services  or  over  how  those  charges  are  billed);  NYCPB  comments  at  7  n.  3  (stating  that  the  authority  to  address  the  format  and  content  of  bills  rendered  by  local  telephone  companies  resides  with  the 
 states). 
 40  47  U.  S.  C.    258(  a). 


 41  1998  Slamming  Order  and  Further  Notice  at    86. 
 42  A  preferred  carrier  freeze  prevents  a  change  in  a  subscriber's  preferred  carrier  selection  unless  the 
 subscriber  gives  the  carrier  from  whom  the  freeze  was  obtained  his  or  her  express  written  or  oral  consent.  See  1998  Slamming  Order  and  Further  Notice  at    112,  n.  348. 


 43  Id.  at    5. 
 44  Id.  at    4. 
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 critical  component  of  the  Commission's  verification  procedures.  Many  commenters  have  indicated  that  unclear  bills  prevent  customers  from  realizing  that  their  carrier  of  choice  has  been 
 switched.  45  A  clear  indication  on  the  bill  of  who  is  providing  service  and  whether  the  service  provider  has  changed  since  the  last  bill  provides  a  necessary  final  step  in  the  verification  process 
 by  allowing  customers  readily  to  detect  unauthorized  changes.  Thus,  our  first  principle,  requiring  telephone  bills  to  indicate  when  a  consumer's  presubscribed  interstate  or  intrastate 
 carrier  has  been  changed,  is  adopted  as  a  verification  requirement.  Our  second  principle,  requiring  bills  to  provide  full  and  non-  misleading  descriptions  of  services,  will  also  serve  a 
 verification  function,  by  helping  consumers  to  detect  slamming  by  ensuring  that  consumers  do  not  confuse  the  name  of  any  carrier  with  the  service  it  provides.  46  Finally,  our  third  principle, 
 requiring  telephone  bills  to  contain  clear  and  conspicuous  disclosure  of  consumer  inquiry  information,  47  will  enable  consumers  to  report  slamming  and  begin  the  process  of  returning  to 
 their  authorized  carriers.  Therefore,  these  truth-  in-  billing  principles  serve  as  the  final  step  in  verifying  service  provider  changes,  and  such  rules  are  authorized  by  section  258  of  the  Act. 


 24.  Our  truth-  in-  billing  principles  and  guidelines  also  will  deter  carriers  from  engaging  in  unjust  and  unreasonable  practices  in  violation  of  section  201(  b).  Under  section 
 201(  b),  carrier  practices  must  be  just  and  reasonable.  As  we  stated  above,  the  Commission  has  authority  to  promulgate  rules  implementing  that  requirement  as  to  the  provision  of  interstate 
 services.  Thus,  section  201(  b)  provides  further  authority  for  the  guidelines  adopted  herein.  We  emphasize  that  a  carrier's  provision  of  misleading  or  deceptive  billing  information  is  an  unjust 
 and  unreasonable  practice  in  violation  of  section  201(  b)  of  the  Act.  48  The  principles  and  guidelines  established  in  this  Order  are  intended  to  define  more  specifically  what  would 
 constitute  a  violation  of  section  201  in  the  billing  context  for  the  covered  carriers.  Moreover,  the 
 45  See,  e.  g.,  NCL  comments  at  2  (stating  that  fraudulent  companies  take  advantage  of  consumer  confusion 
 over  phone  bills);  NYCPB  comments  at  5  (stating  that  consumers  often  complain  that  telephone  bills  do  not  facilitate  the  detection  of  slamming);  Texas  Commission  comments  at  6  (stating  that  focus  group  found  it  difficult  to 


 find  changes  in  services  unless  they  were  specifically  anticipating  and  looking  for  one). 
 46  For  example,  if  a  carrier  is  named  "Phone  Calls,"  the  name  of  such  carrier  on  a  telephone  bill  could  be 
 confused  with  telephone  service,  and  the  consumer  may  not  realize  that  he  or  she  has  been  switched  to  an  unauthorized  carrier.  See  infra,  Section  II(  C)(  2).  We  note  the  standardized  label  guideline  provides  an  important 


 consumer  protection,  as  discussed  infra  Section  II(  C)(  2)(  c),  but  is  not,  however,  related  to  deterring  slamming.  See  supra    21. 


 47  See  infra,  Section  II(  C)(  3). 
 48  For  example,  the  Commission  has  previously  warned  a  carrier  that  failure  to  correct  misleading 
 information  it  provided  in  connection  with  issuance  of  a  calling  card  could  constitute  a  violation  of  section  201(  b)  and  result  in  enforcement  action,  including  show  cause  or  forfeiture  proceedings.  See,  e.  g.,  Robert  E.  Allen,  Letter, 


 7  FCC  Rcd  7529,  7530  (1992)  (information  provided  by  carrier  in  connection  with  issuance  of  calling  cards  "may  have  persuaded  many  consumers  to  unnecessarily  destroy  or  discard  otherwise  valid  calling  cards"). 
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 implementation  of  the  general  principles  and  guidelines  set  forth  in  this  Order,  such  as  requiring  clear  descriptions  of  services  for  which  charges  appear  on  the  bill,  will  facilitate  consumer 
 detection  of  fraud,  and  thereby  deter  unscrupulous  carriers  from  engaging  in  unreasonable  practices  such  as  cramming.  In  this  regard,  we  note  that  the  record  supports  our  finding  in  the 
 Notice  that  consumer  difficulty  in  identifying  unauthorized  charges  in  telephone  bills  is  a  significant  factor  in  the  ability  of  unscrupulous  entities  to  engage  successfully  in  cramming.  49 


 25.  Some  commenters  contend  that  our  jurisdiction  to  adopt  rules  concerning  carrier  billing,  if  it  exists  at  all,  exists  only  pursuant  to  our  ancillary  jurisdiction  under  Title  I  of  the 
 Act.  50  The  Commission  has  previously  stated  that  it  has  jurisdiction  under  Title  II  to  regulate  the  manner  in  which  a  carrier  bills  and  collects  for  its  own  interstate  offerings,  because  such  billing 
 is  an  integral  part  of  that  carrier's  communications  service.  51  The  guidelines  adopted  here  apply  to  the  carrier  providing  service  to  customers,  not  to  those  carriers'  billing  agents.  Thus,  for 
 example,  even  where  an  interexchange  carrier  (or  other  carrier)  uses  the  billing  and  collection  services  of  a  LEC  or  other  third-  party  billing  agent,  the  interexchange  carrier  still  bears  the 
 responsibility  of  ensuring  that  such  charges  appear  on  the  bill  remitted  to  the  consumer  in  a  manner  that  complies  with  the  principles  set  forth  in  this  Order.  The  Commission's  Detariffing 
 Order  specifically  stated  that  a  carrier's  billing  and  collection  for  its  own  service,  as  opposed  to  billing  services  provided  to  other  carriers,  is  subject  to  the  Commission's  Title  II  jurisdiction.  52 
 Billing,  like  all  other  practices  for  and  in  connection  with  interstate  service,  must  be  just  and  reasonable.  53  Therefore  we  find  that  we  possess  Title  II  jurisdiction  to  adopt  the  principles  and 


 49  See,  e.  g.,  NYCPB  comments  at  5;  FTC  comments  at  3,  6. 
 50  See,  e.  g.,  ALTS  comments  at  2;  AT&  T  comments  at  11  n.  8;  Time  Warner  comments  at  7. 
 51  See  Local  Exchange  Carrier  Validation  and  Billing  Information  for  Joint  Use  Calling  Cards,  Report  and 
 Order  and  Request  for  Supplemental  Comment,  CC  Docket  No.  91-  115,  7  FCC  Rcd  3528,  3530-  3533  (1992),  clarified  on  reconsideration,  12  FCC  Rcd  1632,  1643-  1645  (1997);  Public  Service  Commission  of  Maryland, 


 Memorandum  Opinion  and  Order,  4  FCC  Rcd  4000,  4004-  4006  (1989),  aff'd  Public  Service  Commission  of  Maryland  v.  FCC,  909  F.  2d  1510  (D.  C.  Cir.  1990);  Detariffing  of  Billing  and  Collection  Services,  Report  and 
 Order,  CC  Docket  No.  85-  88,  102  F.  C.  C.  2d  1150,  1169-  71  (1986)  (Detariffing  Order). 
 52  The  Detariffing  Order  states  that: 


 Although  carrier  billing  and  collection  for  a  communication  service  that  it  offers  individually  or  as  a  joint  offering  with  other  carriers  is  an  incidental  part  of  a  communications  service, 
 we  believe  that  carrier  billing  or  collection  for  the  offering  of  another  unaffiliated  carrier  is  not  a  communication  service  for  purposes  of  Title  II  of  the 
 Communications  Act. 
 Detariffing  Order  59  Rad.  Reg.  2d  (P  &  F)  1007,    31. 
 53  See  47  U.  S.  C.    201(  b). 
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 guidelines  set  forth  herein,  and  no  reliance  on  our  ancillary  jurisdiction  is  necessary. 
 26.  Notwithstanding  the  requirement  of  our  1998  Slamming  Order  and  Further  Notice  that  states  must  accept  the  same  verification  procedures  as  prescribed  by  the 
 Commission,  54  states  will  be  free  to  continue  to  enact  and  enforce  additional  regulation  consistent  with  the  general  guidelines  and  principles  set  forth  in  this  Order,  including  rules  that 
 are  more  specific  than  the  general  guidelines  we  adopt  today.  55  In  addition  to  whatever  powers  they  may  have  to  enforce  their  rules  under  state  law,  states  also  have  express  authority  under 
 section  258  to  enforce  the  Commission's  verification  procedure  rules,  including  the  principles  and  guidelines  adopted  here,  with  respect  to  intrastate  services.  56  We  are  aware  of  several  states 
 that  have  existing  regulations  that  are  consistent  with  the  truth-  in-  billing  guidelines  we  adopt  here.  For  example,  Pennsylvania  has  previously  adopted  "regulations  to  impose  fair  and 
 equitable  standards  governing  billing  and  customer  complaint  procedures."  57  Michigan  prohibits  the  provision  of  misleading  information  in  local  exchange  telephone  bills,  and  requires 
 notification  of  new  services  or  changes  in  existing  service.  58  We  support  these  efforts.  Additionally,  we  note  that  the  National  Association  of  Regulatory  Utilities  Commissions 
 (NARUC)  has  published  a  White  Paper  giving  guidance  to  states  on  how  to  provide  consumer  protection  in  the  area  of  telephone  service,  including  proposals  to  increase  the  clarity  of 
 telephone  bills.  59  In  setting  forth  its  proposals,  NARUC  highlighted  the  need  for  "clear  billing  that  customers  can  easily  read  and  understand"  and  noted  that  "[  i]  n  many  cases,  this  is  not  true  of 
 current  telecommunications  company  bills,  particularly  those  that  come  from  the  local  exchange  company."  60  Many  of  the  principles  and  guidelines  adopted  in  this  Order  are  consistent  with 
 NARUC's  proposals.  We  look  upon  this  Order  as  another  phase  of  our  partnership  with  the  states  to  promote  competition  and  to  combat  telecommunications-  related  fraud.  61  Through 


 54  1998  Slamming  Order  and  Further  Notice  at    87. 
 55  1998  Slamming  Order  and  Further  Notice  at    86-  90;  see,  e.  g.,  California  Commission  comments  at  2 
 (stating  that  the  Commission  should  set  minimum  standards,  but  not  prevent  states  from  applying  stricter  standards);  Maine  Commission  comments  at  2  (same);  Minnesota  OAG  comments  at  4  (same). 


 56  1998  Slamming  Order  and  Further  Notice  at    90. 
 57  Pennsylvania  Commission  comments  at  4. 
 58  Mich.  Admin.  Code  MCL  484.322(  a),  484.337  (1996). 
 59  NARUC,  White  Paper  on  Resolution  Urging  Support  of  Principles  Promoting  Consumer  Awareness  and 
 Protection  by  Policy  Makers  Involved  with  Telecommunications  Regulation,  at  1  (NARUC  White  Paper). 
 60  Id. 


 61  See,  e.  g.,  1998  Slamming  Order  and  Further  Notice  at    87. 
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 information  sharing  and  dialogue,  we  intend  to  work  together  with  the  states  towards  the  common  objective  of  truth-  in-  billing. 
 27.  Finally,  we  note  that  we  possess  complementary  but  distinct  jurisdiction  with  the  Federal  Trade  Commission  (FTC)  to  ensure  that  consumers  are  treated  fairly  with  regard  to  their 
 telephone  bills.  The  FTC  does  not  have  jurisdiction  over  activities  of  common  carriers  subject  to  Title  II  of  the  Communications  Act.  62  Congress  has,  however,  in  limited  circumstances,  granted 
 the  FTC  concurrent  authority  to  establish  rules  relating  to  certain  areas  of  telephone  billing  and  collection.  For  example,  the  Telephone  Disclosure  and  Dispute  Resolution  Act  of  1992 
 (TDDRA)  requires  both  the  FCC  and  the  FTC  to  adopt  separate,  complementary  rules  to  promote  legitimate  pay-  per-  call  services  and  protect  telephone  subscribers  from  fraudulent  and 
 abusive  practices  from  both  carriers  and  non-  carrier  entities,  respectively.  63  We  have  enacted  regulations  pursuant  to  section  228  that,  inter  alia,  require  carriers  to  show,  in  a  portion  of  the 
 bill  separate  from  ordinary  telephone  charges,  the  amount  of  pay-  per-  call  charges,  the  type  of  services  for  which  the  consumer  is  being  charged,  and  the  date,  time,  and  duration  of  pay-  per-call 
 calls.  64  We  also  require  such  segregation  for  interstate  information  charges  assessed  pursuant  to  a  presubscription  or  comparable  agreement.  65  The  FTC  is  working  currently  to 
 extend  its  pay-  per-  call  authority  to  enact  billing  dispute  rights  akin  to  those  available  under  the  Fair  Credit  Reporting  Act.  66  Our  truth-  in-  billing  guidelines  will  compel  subject  carriers  to 
 provide  consumers  with  clear  and  necessary  information  in  order  to  make  informed  choices  and  safeguard  themselves  against  fraud.  The  FTC  states  that  the  goals  of  this  truth-  in-  billing 
 proceeding  dovetail  with  the  objectives  of  its  own  pay-  per-  call  rulemaking,  and  that  "[  c]  learer  bills  that  provide  non-  deceptive  information  will  enhance  the  ability  of  consumers  to  take 
 advantage  of  the  improved  billing  dispute  rights  for  telephone-  billed  purchases  contemplated  in  the  FTC's  proposed  Rule  revisions."  67  We  agree  and  shall  continue  to  work  closely  with  the  FTC 
 on  ways  to  exercise  our  respective  jurisdictions  to  ensure  that  all  consumers  receive  the  benefit  of  clear  and  understandable  telephone  bills. 


 62  See  15  U.  S.  C.    45(  a)(  2)  (stating  that  the  Federal  Trade  Commission  does  not  have  jurisdiction  over 
 "common  carriers  subject  to  the  Acts  to  regulate  commerce,  air  carriers,  and  foreign  air  carriers  .  .  .  .");  see  also  FTC  Comments  at  7  n.  10. 


 63  Pub.  L.  No.  102-  556,  106  Stat.  4181  (1992)  (codified  at  15  U.  S.  C.    1507  et  seq.  and  47  U.  S.  C.    228). 
 64  47  C.  F.  R.    64.1510(  a)(  2)(  ii),  (iii). 
 65  Id.  at    64.1510(  b). 
 66  FTC  comments  at  7,  citing  Proposed  Rules,  Federal  Trade  Commission,  16  C.  F.  R.  Part  308,  Pay-  Per-  Call 
 Rule,  63  Fed.  Reg.  58,524  (1998). 
 67  FTC  comments  at  8. 
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 C.  Specific  Truth-  in-  Billing  Guidelines 
 1.  Clear  Organization  and  Highlighting  New  Service  Provider  Information 


 28.  We  adopt  the  threshold  principle  set  forth  in  the  Notice  that  telephone  bills  must  be  clearly  organized  and  highlight  new  service  provider  information.  68  We  conclude  that  such  a 
 basic  principle  is  essential  to  facilitate  consumers'  understanding  of  services  for  which  they  are  being  charged,  and  thereby  discourage  consumer  fraud  such  as  slamming.  The  goal  of  these 
 requirements  is  to  deter  slamming,  as  well  as  cramming,  and  accordingly,  we  possess  jurisdiction  to  impose  these  requirements  under  sections  201(  b)  and  258  of  the  Act.  69  Based  on  our  review 
 of  the  record  and  experience  handling  consumer  complaints  of  fraudulent  carrier  practices,  we  further  conclude  that  implementation  of  this  principle  translates  into  three  broad,  binding 
 guidelines  on  which  we  sought  comment  in  the  Notice:  (1)  the  name  of  the  service  provider  associated  with  each  charge  must  be  clearly  identified;  (2)  charges  must  be  separated  by  service 
 provider;  and  (3)  clear  and  conspicuous  notification  of  any  change  in  service  provider  must  be  made  manifest.  70  Through  ensuring  that  the  billed  information  concerning  service  providers  is 
 clear  and  conspicuous,  these  guidelines  enhance  consumers'  ability  to  review  individual  charges  contained  in  their  telephone  bills  and  detect  unwarranted  charges  or  unauthorized  changes  in 
 their  service  arrangements. 
 29.  In  our  view,  as  well  as  that  of  virtually  all  commenters  who  addressed  this  issue,  71  a  clear  description  of  the  name  of  the  service  provider  is  both  rudimentary  to  any  reasonable 
 billing  practice  and  essential  to  combat  unfair  carrier  practices,  including  slamming  and 


 68  Notice,  13  FCC  Rcd  at  18185-  86. 
 69  47  U.  S.  C.    201(  b),  258. 
 70  Notice,  13  FCC  Rcd  at  18185-  18188. 
 71  See,  e.  g.,  Minnesota  OAG  comments  at  13-  15;  NYDPS  comments  at  1;  NYCPB  comments  at  12-  13; 
 USP&  C  comments  at  5-  6;  NCL  comments  at  8-  9;  Commonwealth  comments  at  4;  Century  comments  at  5-  6;  West  Virginia  Commission  comments  at  2-  3;  Small  Business  comments  at  8;  SBC  comments  at  13-  14;  Sprint  comments 


 at  13-  14;  TCA  comments  at  5-  6;  Americatel  comments  at  1-  6;  Billing  Coalition  comments  at  16;  AT&  T  comments  at  14-  15;  Ameritech  comments  at  17;  FTC  comments  at  14-  15;  Maine  Commission  comments  at  5-  6;  Ohio 
 Commission  comments  at  8;  Wisconsin  Commission  comments  at  4;  Missouri  Commission  comments  at  3-  4;  Florida  Commission  comments  at  6;  Washington  Commission  Staff  comments  at  6;  AFT  comments  at  1;  NAAG 
 comments  at  5;  BellSouth  comments  at  7;  Bills  Project  comments  at  6;  UCAN  comments  at  9;  Georgia  comments  at  3;  Kansas  Commission  comments  at  5;  NACAA  comments  at  2;  Pennsylvania  Commission  comments  at  7;  QCI 
 comments  at  5. 
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 cramming.  Consumers  will  be  able  to  detect  whether  or  when  they  have  been  slammed,  crammed,  or  even  overcharged  only  if  they  can  readily  identify  their  current  service  providers. 
 Clear  identification  of  service  providers  is  also  an  essential  predicate  for  consumers  to  be  able  to  communicate  complaints  and  dispute  billed  charges.  72  Indeed,  our  complaint  experience 
 suggests  that  consumers  are  both  confused  and  potentially  hampered  in  obtaining  information  about  billed  charges  or  lodging  complaints  when  the  only  entity  name  associated  with  a  charge 
 is,  for  example,  that  of  a  "billing  aggregator."  73  Regardless  of  whether  the  billing  aggregator  can  handle  the  consumer  inquiry  or  complaint  on  behalf  of  the  service  provider,  74  we  believe  that 
 identification  of  the  service  provider  is  essential  to  enable  consumers  to  monitor  their  service  arrangements  and  judge  the  accuracy  of  the  charges  levied. 


 30.  We  agree  with  NAAG  that  it  is  both  unreasonable  and  unfair  to  expect  consumers  to  undertake  extensive  investigations  on  their  own  simply  to  discover  the  identity  of  the  service 
 provider  who  placed  a  charge  on  their  bill.  75  Accordingly,  we  find  that,  consistent  with  most  carriers'  existing  practices,  76  our  truth-  in-  billing  guidelines  require  that  the  name  of  the  service 
 provider  must  be  clearly  listed  on  the  bill  in  connection  with  that  entity's  charges  to  the  consumer.  77 


 72  SBC  comments  at  13-  14  (this  information  will  aid  the  consumer  in  identifying  the  carrier  responsible  for 
 the  charge,  and  most  LECs  already  follow  this  practice);  Sprint  comments  at  13-  14  (identifying  carrier  levying  the  charge  is  particularly  important  where  a  reseller  uses  the  carrier  identification  code  (CIC)  of  the  underlying  facilities 


 provider,  and  arguing  that  LECs  should  be  required  to  use  the  Switchless  Reseller  Indicator  in  their  service  order  systems);  FTC  comments  at  14-  15  (suggesting  carriers  list  name  of  service  provider  and,  where  applicable,  name 
 and  number  of  billing  aggregator  or  clearinghouse  with  authority  to  resolve  a  consumer  complaint). 
 73  See,  e.  g.,  Informal  Complaint  of  WIS  Sheet  Metal  Inc.,  IC  No.  99-  00232  (submitted  Jan.  13,  1999); 
 Informal  Complaint  of  Roberts  &  Roberts,  IC  No.  99-  04707  (submitted  Feb.  5,  1999);  see  also  NASUCA  comments  at  15  (stating  that  billing  aggregators  often  are  unable  to  provide  consumers  information  about  charges). 


 Billing  aggregators  or  clearinghouses  consolidate  charges  from  multiple  providers  of  telephone  services  and  contract  with  LECs  for  those  charges  to  appear  on  consumers'  telephone  bills.  Billing  Coalition  comments  at  1. 


 74  See  Section  II(  E),  infra  (requiring  that  bills  must  display  a  toll-  free  number  for  an  entity  authorized  to 
 resolve  consumer  complaints). 
 75  See  NAAG  comments  at  5.  NAAG  further  asserts  that  providers  that  do  not  wish  to  disclose  their  identity 
 should  not  be  permitted  access  to  the  billing  process.  Id. 
 76  See,  e.  g.,  Ameritech  comments  at  17;  SBC  comments  at  13-  14;  BellSouth  comments  at  7. 


 77  We  note  that  this  guideline  does  not  require  wireless  carriers  to  identify  all  entities  with  which  they  have 
 roaming  arrangements.  We  agree  that  listing  each  such  entity  would  be  both  unnecessary  and  potentially  confusing  to  consumers.  See  e.  g.  Primeco  comments  at  9;  Bell  Atlantic  Mobile  comments  at  12-  13;  Airtouch  comments  at  6-  7; 


 CenturyTel  comments  at  5;  BellSouth  reply  at  7;  Bell  Atlantic  Mobile  reply  at  9. 
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 31.  We  conclude  that,  where  telephone  bills  include  charges  from  more  than  one  service  provider,  the  charges  should  be  displayed  according  to  service  provider  with  clear  visual 
 separation  --  although  not  necessarily  separate  pages  --  to  distinguish  the  different  providers.  In  our  view,  this  provider-  based  means  of  presenting  charges  establishes  a  logical,  unambiguous 
 framework  to  associate  charges  with  a  particular  service  provider,  which  in  turn  promotes  clarity  in  billed  charges  and  reduces  customer  confusion  that  gives  rise  to  fraudulent  carrier  practices. 
 In  response  to  our  query  in  the  Notice,  78  commenters  generally  favor  as  most  effective  and  economical  a  provider-  based  bill  format  over  grouping  charges  exclusively  by  service 
 category.  79  We  agree  that  listing  charges  by  service  provider  should  produce  bills  that  can  be  reviewed  by  consumers  more  easily  than  those  that  would  list  charges  by  service  type,  and 
 facilitate  the  prompt  detection  of  unreasonable  and  fraudulent  carrier  practices.  For  instance,  if  a  consumer  were  slammed,  a  bill  segregated  by  provider  would  show,  in  a  distinct  portion  of  the 
 bill,  all  the  charges  billed  on  behalf  of  the  unauthorized  carrier.  A  bill  segregated  by  service  type,  on  the  other  hand,  could  list  together  long  distance  charges  from  the  unauthorized  carrier, 
 the  authorized  carrier,  and  any  carrier  that  was  used  to  place  dial-  around  calls.  This  intermingling  of  authorized  and  unauthorized  charges  could  make  it  more  difficult  for  a 
 consumer  to  realize  that  he  or  she  has  been  slammed. 
 32.  It  appears  that  listing  charges  by  service  provider  presently  is  the  industry  standard.  80  Several  carriers  that  are  currently  engaged  in,  or  recently  have  completed,  billing 
 improvement  projects  report  favorable  customer  reaction  to  bills  that  segregate  charges  by  service  provider.  81  Some  commenters  also  note  that  listing  charges  by  service  provider  rather 
 than  by  service  type  avoids  the  confusion  that  might  ensue  if  each  component  of  a  bundled  service  package  were  required  to  be  listed  and  priced  separately.  82  In  particular,  we  agree  with 
 the  observations  of  several  commenters  that  consumers  understand  the  bundled  offerings  they 
 78  Specifically,  we  asked  whether  telephone  bills  might  be  improved  by  listing  all  charges  by  service  type 
 (e.  g.,  local,  long  distance,  and  miscellaneous  services)  in  clearly  separate  sections  of  the  bill  or,  alternatively,  by  grouping  charges  according  to  service  provider.  Notice,  13  FCC  Rcd  at  18185. 


 79  See,  e.  g.,  Florida  Commission  comments  at  4-  5;  NCL  comments  at  7,  Maine  Commission  comments  at  2-  3; 
 Ohio  Commission  comments  at  6;  Ameritech  comments  at  13;  BellSouth  comments  at  4;  SBC  comments  at  4-  5. 
 80  See,  e.  g.,  Ameritech  comments  at  13;  BellSouth  comments  at  4;  SBC  comments  at  4.  See  also  California 
 Commission  comments  at  4  (stating  that  California  law  requires  separate  sections  for  each  billing  entity). 
 81  See,  e.  g.,  Ameritech  comments  at  2,  13;  Bell  Atlantic  comments  at  Attachment,  "Answers  to  Specific 
 Questions,"  at  3-  4. 
 82  See,  e.  g.,  Bell  Atlantic  comments  at  Attachment,  "Answers  to  Specific  Questions,"  at  4-  5;  Sprint  comments 
 at  4;  GTE  comments  at  10;  Time  Warner  comments  at  10-  11;  CTIA  comments  at  5;  U  S  West  comments  at  17;  SBC  comments  at  7;  PCIA  comments  at  8;  NCL  comments  at  7  (also  stating  that  each  service  included  in  bundled 


 offering  should  be  itemized  and  described  clearly). 
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 purchase  in  terms  of  the  single  overall  price  of  the  services  provided  by  carrier,  and  would  be  confused  if  the  bundled  offering  were  broken  apart  and  the  component  parts  priced  separately 
 solely  for  billing  purposes.  83 
 33.  As  a  final  corollary  to  our  guidelines  concerning  providers,  we  conclude  that  new  service  providers  must  be  clearly  and  conspicuously  identified  on  the  bill.  We  contemplate  that 
 such  clear  and  conspicuous  identification  would  involve  all  service  providers  that  did  not  bill  for  services  on  the  previous  billing  statement,  and  would  describe,  where  applicable,  any  new 
 presubscribed  or  continuing  relationship  with  the  customer.  84  Clear  identification  of  new  service  providers  will  improve  consumers'  ability  to  detect  slamming.  85  Currently,  telephone  bills  do  not 
 always  clearly  show  when  there  has  been  a  change  in  presubscribed  carriers.  Telephone  subscribers  may  realize  that  their  presubscribed  interexchange  carrier  has  been  changed  only  if 
 they  notice  a  carrier  change  charge  on  their  bill.  86  Moreover,  as  noted  in  our  Notice,  the  difficulty  in  detecting  a  change  in  carriers  may  be  compounded  by  carriers  that  use  potentially 
 misleading  names  so  that  consumers  may  believe  that  a  carrier's  name  refers  to  a  service  offering,  rather  than  being  the  name  of  a  carrier.  87  As  noted  previously,  our  recently  enacted 
 anti-  slamming  regulations  can  be  fully  effective  only  if  consumers  are  able  to  detect  promptly  that  a  slam  has  occurred.  Because  our  new  slamming  rules  absolve  consumers  of  liability  for 
 unpaid  charges  by  unauthorized  carriers  for  a  period  of  30  days  after  a  slam  has  occurred,  the  efficacy  of  such  rules  hinge  on  consumers  being  able  reasonably  to  discover  a  slam  on  the  first 
 bill  that  they  receive  after  the  unauthorized  change  in  service  occurs.  88  In  the  1998  Slamming  Order  and  Further  Notice,  we  recognized  the  importance  of  the  telephone  bill  in  providing 
 notice  of  a  carrier  change.  89 
 83  See,  e.  g.,  Sprint  comments  at  4-  5;  BellSouth  comments  at  4. 


 84  That  is,  if  a  new  provider  has  become  the  customer's  new  presubscribed  intra  or  interLATA  toll  carrier,  the  bill 
 must  make  this  information  apparent  to  the  customer. 
 85  Small  Business  comments  at  8  (arguing  that  merely  listing  name  of  billing  aggregator  or  clearinghouse  is 
 insufficient,  and  that  identifying  the  reseller  instead  of  the  underlying  facilities-  based  carrier  will  assist  consumers  in  detecting  if  they  have  been  slammed  by  a  reseller  where  the  underlying  facilities-  based  carrier  remains  the  same). 


 86  A  carrier  change  charge  is  a  charge  typically  imposed  by  a  local  exchange  carrier  on  a  subscriber  who  has 
 requested  a  change  in  presubscribed  interexchange  carrier. 
 87  Notice,  13  FCC  Rcd  at  18185. 


 88  See  47  C.  F.  R.    64.1100(  d). 
 89  We  emphasized  that  this  "absolution"  rule  would  encourage  telephone  subscribers  to  examine  their 
 telephone  bills  early  and  carefully  and  observed  that  "a  waiver  of  the  30-  day  limit  might  be  appropriate  if  the  subscriber's  telephone  bill  failed  to  provide  reasonable  notice  to  the  subscriber  of  a  carrier  change."  1998  Slamming 


 Order  and  Further  Notice  at    20,  24. 
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 34.  Clear  identification  of  new  providers  also  will  improve  consumers'  ability  to  detect  cramming.  We  find  that  consumers'  discovery  of  fraudulent  charges  would  be  prompted 
 by  noticing  that  an  unfamiliar  service  provider  has  charges  appearing  on  the  bill.  Indeed,  because  cramming  complaints  most  commonly  emanate  from  charges  levied  by  service  providers 
 that  do  not  have  a  pre-  existing  business  relationship  with  the  consumer,  90  highlighting  the  name  of  a  new  service  provider  should  prompt  a  subscriber  to  examine  closely  the  particular  charges 
 billed  by  that  provider  and  facilitate  detection  of  cramming.  Moreover,  although  many  LECs  now  participate  in  voluntary  anti-  cramming  guidelines  that  enable  LECs  to  remove  cramming 
 charges  from  the  bill,  91  such  measures  do  not  protect  consumers  who  pay  their  bills  without  realizing  that  they  have  been  crammed.  TCA  cites  results  of  a  recent  survey  involving  over  400 
 randomly  selected  Texas  consumers  who  filed  cramming  complaints  with  the  Texas  Commission.  Forty-  four  percent  of  the  survey  respondents  claimed  to  have  paid  unauthorized 
 charges  totalling  between  $11  and  $50.  Another  25  percent  paid  unauthorized  charges  between  $51  and  $100,  and  21  percent  paid  charges  exceeding  $100.  92  Our  complaint  records  also 
 indicate  that  consumers  often  pay  unauthorized  recurring  charges  for  several  months  before  they  realize  the  questionable  nature  of  the  charges.  93  In  our  view,  clear  identification  of  new  service 
 providers  will  appropriately  signal  to  consumers  the  need  to  scrutinize  their  bills  to  make  sure  that  they  are  being  billed  only  for  authorized  services.  Moreover,  some  crammed  charges  may 
 involve  "telephone-  billed  purchases"  94  which  trigger  a  range  of  consumer  rights  and  protections 


 90  See,  e.  g.,  U  S  West  comments  at  11  (stating  that  most  consumer  billing  complaints  involve  "third-  party  toll 
 charges"). 
 91  FCC  and  Industry  Announce  Best  Practice  Guidelines  to  Protect  Consumers  from  Cramming,  FCC  Press 
 Release  (July  22,  1998). 
 92  TCA  comments  at  2-  5. 


 93  See,  e.  g.,  Informal  Complaint  of  Sarah  Krank,  IC  No.  98-  29550. 
 94  Under  the  TDDRA,  a  telephone-  billed  purchase  is  defined  as: 


 any  purchase  that  is  completed  solely  as  a  consequence  of  the  completion  of  the  call  or  a  subsequent  dialing,  touch  tone  entry,  or  comparable  action  of  the  caller.  Such 
 term  does  not  include  --  (A)  a  purchase  by  a  caller  pursuant  to  a  preexisting  agreement  with  the 
 vendor;  (B)  local  exchange  telephone  services  or  interexchange  telephone  services  or  any  service 
 that  the  Federal  Communications  Commission  determines,  by  rule  -- 
 (i)  is  closely  related  to  the  provision  of  local  exchange  telephone  services  or  interexchange  telephone  services;  and 
 (ii)  is  subject  to  billing  dispute  resolution  procedures  required  by  Federal  or 
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 under  the  TDDRA  95  and  the  Federal  Trade  Commission's  implementing  regulations.  Our  provider  identification  guidelines,  which  facilitate  consumers'  detection  of  crammed  charges, 
 appropriately  protect  consumers'  opportunity  to  assert  those  rights. 
 35.  In  adopting  these  provider-  based  identification  guidelines,  we  have  considered  the  substantial  implementation  concerns  raised  by  carriers  in  response  to  the  Notice  proposal  that 
 telephone  bills  explain  any  new  types  of  charges  appearing  on  the  bill  for  the  first  time.  96  Virtually  all  carriers  assert  that  their  current  billing  systems  cannot  conduct  a  month-  to-  month 
 comparison  of  all  charges  as  would  be  necessary  to  identify  and  explain  all  new  services  being  billed  for  the  first  time,  and  that  the  modifications  necessary  to  perform  this  function  would  be 
 prohibitively  expensive.  97 
 36.  Carriers  have  discretion  to  determine  the  best  means  to  highlight  the  required  information;  we  do  not  require  that  separate  bill  pages  be  used  to  show  the  charges  billed  by 
 each  service  provider.  Again,  we  are  cognizant  of  commenters'  concerns  that  any  rigid  formatting  rule  that  required  separate  pages,  or  produced  "dead  space"  on  the  bill,  may  frustrate 


 State  statute  or  regulation;  or  (C)  the  purchase  of  goods  or  services  which  is  otherwise  subject  to  billing  dispute 
 resolution  procedures  required  by  Federal  statute  or  regulation. 


 15  U.  S.  C.    5724(  1). 
 95  Public  Law  l02-  556,  106  Stat.  4181,  approved  Oct.  28,  1992. 


 96  Notice,  13  FCC  Rcd  at  18185. 
 97  See,  e.  g.,  Ameritech  comments  at  11-  12;  Sprint  comments  at  7-  8;  RCA  comments  at  4;  Bell  Atlantic 
 comments  at  Attachment,  "Answers  to  Specific  Questions,"  at  6  (identifying  new  service  charges  each  month  would  require  comparing  approximately  40  million  billing  lines  against  previous  month's  entries);  MCI  comments  at  34-35; 


 U  S  West  comments  at  5,  20  (would  require  substantial  and  costly  modification  of  three  principal  billing  systems  and  approximately  30  interacting  databases  that  are  used  to  produce  12.  2  million  bills  per  month);  PCIA 
 comments  at  9.  In  contrast,  highlighting  each  new  service  provider,  as  opposed  to  each  new  service,  will  be 
 considerably  more  economical  to  implement.  97  97  Month-  to-  month  comparison  of  service  providers  would  involve  far  less  data  than  comparison  of  all  billed  charges.  Opponents  also  question  the  ultimate  value  of 


 highlighting  new  charges  to  elucidate  fraud.  97  97  See,  e.  g.,  PCIA  comments  at  7-  8;  Ameritech  comments  at  10-  11;  BellSouth  Reply  comments  at  5;  Billing  Coalition  comments  at  15-  16.  Highlighting  charges  for  new  types  of 
 service  probably  would  involve  a  larger  number  of  items  than  highlighting  new  service  providers.  This  could  significantly  lengthen  bills  and  confuse  consumers  by  repeating  a  significant  amount  of  information  that  is  shown 
 elsewhere  in  the  bill.  Given  the  more  economical  alternative  of  provider-  based  identification  which  effectively  communicates  changes  in  service  to  the  consumer,  we  believe  that  highlighting  those  service  providers  that  did  not 
 charge  for  service  on  the  previous  bill  is  the  better  choice  to  advance  consumer  education  and  our  anti-  cramming  and  slamming  goals. 
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 consumers  98  and  substantially,  or  even  prohibitively,  increase  carriers'  billing  expenses.  99  Accordingly,  we  do  not  mandate  any  particular  means  of  complying  with  the  guidelines  set  forth 
 herein,  but  rather  permit  and  contemplate  that  carriers  will  employ  a  variety  of  practices  that  would  be  consistent  with  this  Order.  For  example,  following  suggestions  by  the  FTC  and  NCL, 
 colored  ink  or  different  fonts  or  type  sizes,  along  with  explanatory  notes,  could  be  used  to  highlight,  within  the  body  of  the  bill  or  on  an  existing  summary  page,  the  names  of  new 
 presubscribed  carriers  and  service  providers.  100  In  adopting  a  provider-  based  guideline  and  affording  wide  latitude  to  determine  the  most  efficient  way  to  convey  the  service  provider 
 information,  we  have  balanced  consumers'  need  for  clear,  logical,  and  easily  understood  charges  against  concerns  that  rigid  formatting  and  disclosure  requirements  would  inhibit  innovation  and 
 greatly  increase  carrier  costs. 
 2.  Full  and  Non-  Misleading  Billed  Charges 
 37.  We  adopt  the  second  core  principle  set  forth  in  the  Notice  that  bills  should  contain  full  and  non-  misleading  descriptions  of  the  service  charges  that  appear  therein.  In  our  view, 
 providing  clear  communication  and  disclosure  of  the  nature  of  the  service  for  which  payment  is  expected  is  fundamental  to  a  carrier's  obligation  of  reasonable  charges  and  practices.  Indeed,  we 
 find  it  difficult  to  imagine  any  scenario  where  payment  could  be  lawfully  demanded  on  the  basis  of  inaccurate,  incomplete,  or  misleading  information.  101  Moreover,  to  permit  such  practices  in 
 the  context  of  telecommunications  services  is  particularly  troublesome  in  light  of  the  rapid  technological  and  market  developments,  and  associated  new  terminology,  that  can  confuse  even 
 the  most  informed  and  savvy  telecommunications  consumer.  Accordingly,  as  discussed  below,  we  adopt  three  guidelines  that  implement  this  core  disclosure  principle. 


 a.  Billing  Descriptions 
 38.  We  conclude  that  services  included  on  the  telephone  bill  must  be  accompanied  by 
 98  See,  e.  g.,  Bell  Atlantic  comments  at  Attachment,  "Answers  to  Specific  Questions,"  at  5  (consumers  already 
 complain  about  too  many  pages);  FTC  comments  at  10-  11. 
 99  See,  e.  g.,  Sprint  comments  at  6;  USTA  comments  at  5  (reporting  that  small  USTA  member  estimates  that 
 adding  additional  page  to  bill  would  increase  mailing  costs  by  $600,000  per  year). 
 100  FTC  comments  at  10-  11;  NCL  comments  at  7. 


 101  We  agree  with  U  S  West  that  "no  reputable  business  can  be  against  the  ideas  associated  with 
 'truth-  in-  billing'  anymore  than  comparable  ideas  reflected  in  other  'truth-  in-  xxx'  initiatives,  such  as  truth-  in-  lending  or  truth-  in-  advertising."  U  S  West  comments  at  1.  See  also  Thompson  Medical  Co.  Inc.,  v.  Federal  Trade 


 Commission,  791  F.  2d  189,  195  (D.  C.  Cir.  1986)  (a  company  has  "no  right  to  stay  in  business  if  the  only  way  it  can  do  so  is  to  engage  in  false  and  misleading  advertising"). 
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 a  brief,  clear,  plain  language  description  of  the  services  rendered.  102  The  description  of  the  charge  must  be  sufficiently  clear  in  presentation  and  specific  enough  in  content  so  that  customers 
 can  accurately  assess  that  the  services  for  which  they  are  billed  correspond  to  those  that  they  have  requested  and  received,  and  that  the  costs  assessed  for  those  services  conform  to  their 
 understanding  of  the  price  charged.  Requiring  clear  descriptions  of  billed  charges  will  assist  consumers  in  understanding  their  bills,  and  thereby,  deter  slamming,  as  well  as  cramming. 


 39.  In  the  Notice,  we  observed  that  telephone  bills  often  contain  vague  or  inaccurate  descriptions  of  the  services  for  which  the  customer  is  being  charged.  For  example,  many 
 complaints  we  have  received  involve  charges  identified  on  local  telephone  bills  simply  as  "monthly  fee"  or  "basic  access,"  without  further  explanation.  103  The  record  in  this  proceeding 
 persuades  us  that  unclear  or  cryptic  telephone  bills  exacerbate  consumer  confusion,  as  well  as  the  problems  of  cramming  and  slamming.  104  Indeed,  a  common  theme  voiced  in  the  consumer 
 complaints  we  receive  is  that  telephone  bills  contain  insufficient  information  to  enable  consumers  to  determine  the  nature  of  the  service  for  which  they  are  being  billed.  In  our  view, 
 clear  billing  descriptions  of  the  services  rendered  will  reduce  these  problems.  Clear  and  easily  understood  service  descriptions  will  enable  consumers  to  verify  the  services  they  have  ordered, 
 thus  facilitating  the  detection  of  slamming  and  cramming.  Although  the  requirement  of  clear  identification  of  service  providers,  discussed  earlier,  will  solve  a  large  portion  of  the  problem,  it 
 does  not  eliminate  the  potential  for  fraudulent  carrier  practices.  For  example,  the  record  indicates  that  some  carriers  choose  corporate  names  that  sound  like  telecommunications  services, 
 e.  g.,  "Phone  Calls,"  to  confuse  consumers  and  facilitate  cramming,  while  others  use  corporate  names  such  as  "I  Don't  Know,"  "Whatever,"  and  "Anyone  is  OK,"  as  a  device  to  trick  consumers 
 into  unwittingly  selecting  the  deceiver  as  their  long-  distance  service  provider.  105  Requiring  descriptions  of  services,  in  combination  with  the  clear  identification  of  service  providers,  assists 
 in  the  detection  of  slamming  by  enabling  consumers  to  distinguish  between  the  names  of 


 102  We  agree  with  Sprint  that  a  customer  should  be  able  to  determine  what  service  a  carrier  has  provided  based 
 on  the  service  description  presented  in  his  or  her  telephone  bill.  See  Sprint  comments  at  11-  13;  see  also  TCA  comments  at  5-  6  (language  and  format  of  the  bill  must  be  sufficiently  clear  in  presentation  and  specific  enough  in 


 content  that  customers  can  accurately  assess  that  the  services  for  which  they  are  billed  correspond  to  those  they  have  requested  and  received,  and  that  the  costs  assessed  for  those  services  conform  to  their  understanding  of  their  price). 


 103  Notice,  13  FCC  Rcd  at  18177. 
 104  See  supra  Section  II(  A)  (Adoption  of  Guidelines)  and  Section  II(  C)  (Specific  Truth-  in-  Billing  Guidelines). 
 105  See  Small  Business  comments  at  7-  9  (highlighting  the  problem  of  misleading  carrier  company  names).  By 
 using  a  corporate  name  such  as  "I  Don't  Know,"  an  unscrupulous  carrier  can  trick  unwitting  consumers  into  selecting  it  as  their  preferred  carrier.  For  example,  the  telemarketing  representative  for  the  carrier  I  Don't  Know 


 may  ask  a  leading  question  such  as,  "Who  would  you  like  to  be  your  long  distance  carrier?"  The  consumer  who  responds,  "I  don't  know,"  may  then  have  his  phone  service  switched  to  the  carrier  I  Don't  Know. 
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 services  ordered  and  the  names  of  carriers.  Accordingly,  our  jurisdiction  to  impose  this  requirement  stems  from  section  258  and  its  goal  of  deterring  slamming.  106 
 40.  We  contemplate  that  sufficient  descriptions  will  convey  enough  information  to  enable  a  customer  reasonably  to  identify  and  to  understand  the  service  for  which  the  customer  is 
 being  charged.  107  Conversely,  descriptions  that  convey  ambiguous  or  vague  information,  such  as,  for  example,  charges  identified  as  "miscellaneous,"  would  not  conform  to  our  guideline.  108 
 Similarly,  in  our  view,  a  charge  described  by  what  it  is  not,  such  as,  for  example,  "service  not  regulated  by  the  Public  Service  Commission"  is  inherently  ambiguous  and  does  not  disclose 
 sufficient  information.  There  is  no  way  for  a  consumer  to  discern  from  this  description  that  the  charge  refers  to,  for  example,  inside  wiring  maintenance  insurance.  109 
 41.  Although  carriers  must  provide  sufficient  information,  we  emphasize  that  full  descriptions  do  not  mean  redundant  or  unnecessary  explanations.  In  particular,  carriers  need  not 
 define  those  terms  that  are  already  generally  understood  by  consumers,  such  as  "local  service"  or  "long  distance  service."  Similarly,  carriers  need  not  identify  every  long  distance  call  as  being  a 
 long  distance  call.  Rather,  they  may  simply  identify  a  section  of  the  telephone  bill  as  "long  distance  service,"  followed  by  an  itemized  description  of  calls  showing  the  destination  cities,  the 
 numbers  dialed,  the  date,  and  the  charge  for  each  call.  We  also  invite  carriers  to  consider  using  graphical  presentations  such  as  symbols,  color  coding,  etc.,  to  identify  services  in  a  space-efficient 
 manner.  110  Such  methods  may  make  it  easier  for  small  carriers  to  comply  with  our  rules  since  it  may  afford  them  flexibility  to  work  within  the  technical  parameters  of  their  current 
 billing  systems.  We  do  not  prescribe  any  particular  methods  of  presentation,  organization,  or  language,  but  rather  encourage  carriers  to  be  innovative  in  designing  bills  that  provide  clear 
 descriptions  of  services  rendered. 
 42.  A  few  commenters  have  expressed  concern  that  including  full  descriptions  of  the  services  appearing  on  telephone  bills  could  overburden  the  rather  limited  capabilities  of  some 


 106  47  U.  S.  C.    258. 
 107  See,  e.  g.,  NASUCA  comments  at  15-  16  (description  should  be  conveyed  in  terms  generally  understood  by 
 ordinary  customer);  see  also  USP&  C  comments  at  4-  5  (descriptions  should  not  use  terminology  comprehensible  only  to  those  who  are  well  versed  in  telecommunications  regulatory  matters). 


 108  We  agree  with  NASUCA  that  no  charge  should  be  identified  as  "miscellaneous"  or  described  by 
 ambiguous  terms  that  may  confuse  a  customer  or  suggest  that  a  service  or  product  is  regulated  when  in  fact  it  is  not.  NASUCA  comments  at  16. 


 109  See  Bills  Project  comments  at  4  (describing  Bell  Atlantic  line  item  charge). 
 110  See,  e.  g.,  UCAN  comments  at  8. 
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 carrier  legacy  billing  systems.  111  In  response,  we  point  out  that  several  carriers  recently  have  undertaken  efforts  to  improve  their  billing  formats,  after  recognizing  that  the  format  of  old  bills 
 did  not  meet  consumers'  needs.  112  More  importantly,  we  simply  cannot  accept  that  it  is  reasonable  for  consumers  to  be  deprived  of  clear  descriptions  of  the  services  they  may  have 
 purchased  because  carriers  have  not  upgraded  their  systems  to  accommodate  this  most  basic  of  disclosure  obligations.  Nor  are  we  persuaded  that  the  meaningful  consumer  protection  against 
 slamming  and  cramming  that  our  service  description  guideline  will  provide  should  be  held  hostage  to  claims  of  antiquated  billing  processes.  Moreover,  we  believe  the  flexibility  permitted 
 under  our  guidelines  affords  carriers  many  options  to  enable  them  to  provide  clear  and  meaningful  service  descriptions  that  may  not  necessitate  costly  modifications  to  their  existing 
 billing  systems.  In  any  event,  we  agree  with  FTC  and  TOPC  that  telephone  bills  that  accurately  describe  the  services  and  charges  appearing  on  them  will  enable  consumers  to  take  greater 
 advantage  of  the  new  products  and  services  available  in  the  telecommunications  marketplace.  113 
 43.  Although  we  decline  to  formulate  standardized  descriptions,  we  encourage  carriers  to  develop  uniform  terminology,  as  recommended  by  NCL,  Bills  Project,  and  the  Kansas 
 Commission.  114  We  believe  that  industry  is  better  equipped  than  the  Commission  to  develop,  in  conjunction  with  consumer  focus  groups,  standardized  descriptions  that  are  compatible  with  the 
 character  limitations  for  text  messages  and  other  operational  restrictions  found  in  the  systems  currently  used  for  billing.  Adopting  understandable  common  descriptions  for  services  offered 
 could  enable  consumers  to  comparison  shop  more  readily,  and  thereby  take  full  advantage  of  the  benefits  of  a  competitive  telecommunications  market. 


 b.  "Deniable"  and  "Non-  Deniable"  Charges 
 111  See,  e.  g.,  USTA  comments  at  5  (mentioning  30  character  limit  for  service  descriptions;  USTA  also 
 maintains  that  many  legacy  billing  systems  have  limited  capabilities  with  respect  to  changing  bill  formats  or  including  significantly  more  information);  U  S  West  comments  at  21  (character  limits  prevent  detailed  service 


 descriptions);  Qwest  comments  at  6-  7.  But  see  CompTel  comments  at  5  (characterizing  cost  of  providing  summary  and  status  pages  and  toll-  free  customer  contact  number  as  "modest"). 


 112  GTE  comments  at  5-  7;  USTA  comments  at  8;  Bell  Atlantic  comments  at  3-  4;  Ameritech  comments  at  2;  MCI 
 comments  at  6-  7. 
 113  See,  e.  g.,  FTC  comments  at  3;  TOPC  reply  at  2-  3. 


 114  NCL  contends  that  we  should  create  standard  terms  for  carriers  to  use  to  describe  services  rendered,  just  as 
 the  Food  and  Drug  Administration  prescribes  standard  terms  to  refer  to  different  food  products.  NCL  suggests  that  providers  that  wish  to  use  their  own  brand  names  or  marketing  terms  should  be  obliged  to  also  show  the  standard 


 FCC  description  for  each  service.  Developing  standard  terms  should  be  collaborative  process  among  companies,  regulators,  and  consumer  advocates,  and  NCL  suggests  that  the  proposed  descriptions  be  tested  with  consumers  to 
 ensure  they  are  understood.  NCL  comments  at  7-  8.  See  also  Bills  Project  comments  at  4;  Kansas  Commission  comments  at  4. 
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 44.  We  further  conclude  that,  where  additional  carrier  charges  are  billed  along  with  local  wireline  service,  reasonable  practice  necessitates  that  carriers  clarify  when  non-  payment 
 for  service  would  not  result  in  the  termination  of  the  consumer's  basic  local  service.  More  specifically,  we  adopt  the  guideline  we  proposed  in  the  Notice  that  telephone  bills  differentiate 
 between  what  are  commonly  referred  to  as  "deniable"  and  "non-  deniable"  charges.  115  A  "deniable"  charge  is  a  charge  that,  if  not  paid,  may  result  in  the  termination  --  "denial"  --  of  the 
 customer's  local  exchange  service.  Conversely,  a  "non-  deniable"  charge  is  a  charge  that  will  not  result  in  the  termination  of  the  customer's  basic  service  for  non-  payment,  even  though  the 
 particular  service  for  which  the  charge  has  been  levied,  e.  g.,  paging  service,  could  be  terminated.  116  We  agree  with  the  comments  of  state  regulatory  agencies  and  consumer  advocacy 
 groups  that  distinguishing  between  such  charges  on  consumers'  bills  protects  consumers  from  paying  contestable,  unauthorized  charges  out  of  fear  of  losing  basic  telephone  service  for  non-payment. 
 117  Based  on  this  consumer  protection  rationale,  many  states,  including  New  York, 
 Pennsylvania,  Ohio,  California,  Oregon,  and  Arizona  have  enacted  similar  requirements.  118  The  FTC  comments  that  providing  this  information  on  bills  will  reduce  slamming  and  cramming  by 


 enabling  consumers  to  question  charges  without  fear  of  losing  service.  119  We  agree  that  consumers  should  not  be  intimidated  into  paying  contestable  charges  because  of  fear  that  they 
 will  lose  telephone  service.  We  likewise  believe  that  consumers  must  be  fully  empowered  and  apprised  of  their  right  to  refuse  to  pay  for  unauthorized  charges.  Accordingly,  we  conclude  that 


 115  Notice,  13  FCC  Rcd  at  18189. 
 116  Id. 
 117  See,  e.  g.,  Nevadacom  comments  at  4-  5  (distinguishing  between  deniable  and  non-  deniable  charges  will 
 reduce  tendency  of  consumers  to  pay  unauthorized  charges  out  of  fear  that  local  service  will  be  disconnected  if  they  fail  to  pay  and  arguing  that  this  Commission  should  reaffirm  that  it  and  state  commissions,  and  not  the  LECs,  have 


 authority  to  determine  which  charges  are  deniable);  Small  Business  comments  at  13  (such  disclosure  is  necessary  so  that  small  business  users  will  know  what  charges  they  can  contest  and  not  pay  pending  resolution  of  their  complaint 
 without  fear  of  having  their  service  disconnected);  TCA  comments  at  7-  9  (recounting  specific  instances  where  customer  service  representatives  attempted  to  intimidate  and  to  mislead  intentionally  consumers  into  believing  that 
 service  would  be  cut  off  for  failure  to  pay  a  non-  deniable  charge);  Wisconsin  Commission  comments  at  4  (noting  that  the  threat  of  loss  of  service  is  not  an  appropriate  collection  tool);  NASUCA  comments  at  16;  USP&  C 
 comments  at  6-  7;  NYCPB  comments  at  13;  BRTF  comments  at  3-  4;  FTC  comments  at  15-  16;  Maine  Commission  comments  at  7;  Ohio  Commission  comments  at  9-  10;  Missouri  Commission  comments  at  4;  Florida  Commission 
 comments  at  6-  7;  TOPC  comments  at  1-  2;  AARP  comments  at  3;  Bills  Project  comments  at  7;  UCAN  comments  at  9;  Kansas  Commission  comments  at  5;  NACAA  comments  at  2;  Pennsylvania  Commission  comments  at  7;  West 
 Virginia  Commission  comments  at  2. 
 118  See  NYCPB  comments  at  13. 


 119  FTC  comments  at  15-  16. 
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 carriers  must  clearly  identify  on  bills  those  charges  for  which  non-  payment  will  not  result  in  disconnection  of  basic,  local  service.  120 
 45.  We  agree  with  those  commenters  who  state  that  the  terms  "deniable"  and  "non-deniable"  are  inherently  confusing,  if  not  counter-  intuitive,  and  therefore  fail  to  achieve  the  basic 
 goal  of  signalling  to  consumers  their  rights  with  respect  to  such  charges.  121  Rather  than  mandate  any  particular  means  for  accomplishing  this  goal,  however,  we  merely  require  that  carriers 
 clearly  and  conspicuously  identify  those  charges  for  which  nonpayment  will  not  result  in  termination  of  local  service.  We  note  with  approval  the  suggestions  of  some  commenters  that 
 this  may  be  best  accomplished  by  noting  charges  with  an  asterisk  or  other  symbol  directing  the  consumer  to  an  explanatory  footnote.  122  This  footnote  could  provide  information  similar  to  that 
 mandated  by  the  pay-  per-  call  provisions  of  the  Act.  123  Carriers  may  also  elect  to  devise  other  methods  of  informing  consumers  on  the  bill  that  they  may  contest  charges  prior  to  payment.  124 


 46.  We  emphasize,  however,  that  this  guideline  only  applies  where  carriers  include  in  a  single  bill  both  "deniable"  and  "non-  deniable"  charges.  Accordingly,  a  carrier  that  bills 
 directly  for  service  that  includes  no  charges  for  basic,  local  wireline  service  would  not  have  a  disclosure  obligation.  In  this  direct  billing  circumstance,  we  are  persuaded  that  consumers 
 understand  that,  for  example,  their  wireless  or  interexchange  service  may  be  disconnected  should  they  fail  to  pay  the  bill  for  the  specific  service  involved,  but  that  their  basic  local  service,  billed 
 on  a  separate  invoice,  will  not  be  disconnected.  125  Accordingly,  requiring  carriers  to  disclose 


 120  See  47  C.  F.  R.    64.  1510(  c)(  1);  see  also  Policies  and  Rules  Implementing  the  Telephone  Disclosure  and 
 Dispute  Resolution  Act,  Report  and  Order,  8  FCC  Rcd  6885,  6898  (1993). 
 121  See,  e.  g.,  NASUCA  comments  at  16  (stating  that  terms  "deniable"  and  "undeniable"  are  not  easily 
 understood  by  average  customers,  and  that  clear  disclosure  that  basic  service  cannot  be  terminated  if  non-  basic  or  unregulated  charges  are  unpaid  would  be  preferable);  Maine  Commission  comments  at  7. 


 122  See,  e.  g.,  AARP  comments  at  3  (noting  that  monthly  bill  could  identify  deniable  charges  with  an  asterisk 
 and  include  a  brief  description  of  the  terms  deniable  and  non-  deniable  at  the  bottom  of  the  bill);  BellSouth  comments  at  9  (recommending  use  of  an  asterisk). 


 123  Section  228  of  the  Act  states  that  carriers  must  annotate  pay-  per-  call  charges  on  telephone  bills  as  follows: 
 "Common  carriers  may  not  disconnect  local  or  long  distance  service  for  failure  to  pay  disputed  charges  for  information  service."  47  U.  S.  C.    228(  c)(  8)(  B)(  ii). 


 124  We  note  that  the  precise  language  used  to  describe  clearly  and  conspicuously  those  charges  for  which  non-payment 
 would  not  result  in  termination  of  local  service  is  at  the  discretion  of  the  carrier  that  is  seeking  payment  for  these  charges.  Thus,  while  a  carrier  may  elect  to  have  another  entity  bill  the  charges,  this  guideline  does  not  permit 


 the  billing  entity  to  decide  unilaterally  the  appropriate  language. 
 125  See,  e.  g.,  US  Cellular  comments  at  6-  7  (arguing  that  the  distinction  between  "deniable"  and  "non-  deniable" 
 charges  possesses  little  relevance  for  wireless  carriers  as  all  wireless  charges  are  "deniable"). 
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 such  information  on  direct  bills  that  contain  no  basic  local  service  charges  would  place  a  burden  on  carriers  without  any  corresponding  consumer  benefit.  We  further  note  that,  whether  a  charge 
 is  or  is  not  "deniable"  varies  according  to  state  law.  Our  requirement  is  not  meant  to  preempt  states  that  have  yet  to  adopt  such  a  distinction. 


 47.  We  are  unpersuaded  by  some  commenters  that  customers  should  be  informed  of  these  rights  through  a  "dunning  message"  issued  prior  to  termination  of  service  for  non-  payment, 
 rather  than  through  the  telephone  bill.  126  Such  an  approach  does  not  protect  those  consumers  who  pay  charges  that  they  did  not  authorize  out  of  the  mistaken  fear  that  their  service  will  be 
 disconnected  if  they  fail  to  pay.  127  The  complaints  we  receive  demonstrate  that  many  consumers  pay  disputable  charges  immediately,  even  if  they  believe  the  charge  is  unauthorized,  out  of  fear 
 of  losing  local  service.  These  consumers  would  not  receive  any  dunning  notice  and,  thus,  would  remain  unaware  of  their  rights  with  regard  to  these  charges. 


 126  See,  e.  g.,  Media  One  comments  at  3;  Commonwealth  comments  at  5;  Qwest  comments  at  7;  Ameritech 
 comments  at  15. 
 127  Notice,  13  FCC  Rcd  at  18189. 
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 48.  We  are  also  not  persuaded  by  those  commenters  who  contend  that  this  guideline  may  lead  to  an  increase  in  non-  payment  of  legitimate  charges  that  will  outweigh  the  consumer 
 benefits.  128  Although  carriers  must  clearly  identify  those  charges  for  which  non-  payment  will  not  affect  local  service,  the  guideline  does  not  prevent  carriers  from  reminding  customers  of  their 
 obligation  to  pay  all  authorized  charges  and  of  the  consequences,  such  as  credit  bureau  reporting,  of  a  failure  to  pay  any  authorized  charge.  Carriers  may,  for  instance,  remind  customers  that 
 failure  to  pay  a  legitimate  charge  for  paging  would  not  result  in  the  customer's  loss  of  local  exchange  service,  but  might  result  in  termination  of  the  paging  service,  collection  action  by  the 
 paging  provider,  and  damage  to  the  customer's  credit  rating.  We  find  that  such  notice  will  adequately  deter  consumers  from  withholding  payment  of  authorized  charges.  Moreover,  insofar 
 as  consumers  do  have  a  right  to  contest  such  charges  without  risk  of  losing  basic  service,  any  suggestion  to  the  contrary  --  either  explicit  or  implicit  --  is  misleading  and  infringes  on  the 
 customer's  ability  to  exercise  those  rights. 
 c.  Standardized  Labels  For  Charges  Resulting  from  Federal  Regulatory  Action 


 49.  We  conclude  that  the  principle  of  full  and  non-  misleading  descriptions  also  extends  to  carrier  charges  purportedly  associated  with  federal  regulatory  action.  Consistent  with 
 our  core  principle  that  charges  should  be  clearly  described  in  a  manner  that  allows  consumers  to  understand  them,  we  expressed  concern  in  the  Notice  that  consumers  may  be  less  likely  to 
 engage  in  comparative  shopping  among  service  providers  if  they  are  led  erroneously  to  believe  that  certain  rates  or  charges  are  federally  mandated  amounts  from  which  individual  carriers  may 
 not  deviate.  129  Moreover,  we  noted  that  complaints  received  by  the  Commission  indicate  considerable  consumer  confusion  with  regard  to  various  line  item  charges  appearing  on  their 
 monthly  service  bills  that  are  assessed  by  carriers  ostensibly  to  recover  costs  incurred  as  a  result  of  specific  government  action.  1  Charges  resulting  from  federal  regulatory  action  are  "charges, 
 practices  [or]  classifications  .  .  .  for  and  in  connection  with"  interstate  communication  service  pursuant  to  section  201(  b),  and  accordingly,  we  possess  jurisdiction  to  require  carriers  to  employ 
 standardized  labels  for  such  charges. 
 128  See,  e.  g.,  GTC  comments  at  14-  16;  Media  One  comments  at  1-  4;  PMT  comments  at  5-  6;  NITCO  comments 
 at  4;  Liberty  comments  at  4;  CompTel  comments  at  7-  8;  C&  W  comments  at  11;  Commonwealth  comments  at  4;  Century  comments  at  5-  6;  SBC  comments  at  14-  15;  Sprint  comments  at  14-  16;  Excel  comments  at  11;  ALTS 


 comments  at  9-  10;  Time  Warner  comments  at  14;  ACTA  comments  at  8;  Bell  Atlantic  comments  at  Attachment,  "Answers  to  Specific  Questions,"  at  9-  10;  Ameritech  comments  at  15-  16;  GST  comments  at  21-  24. 


 129  Notice,  13  FCC  Rcd  at  18188. 
 130  For  instance,  from  January  1998  through  May  1998,  the  Federal  Communications  Commission's  National 
 Call  Center  received  approximately  10,000  calls  per  month  from  consumers  with  questions  regarding  charges  on  their  bills. 
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 50.  We  find  that  the  substantial  record  on  this  issue  supports  our  adoption  of  guidelines  to  address  customers'  confusion  and  potential  for  misunderstanding  concerning  the 
 nature  of  these  charges.  Specifically,  for  the  reasons  discussed  more  fully  below,  we  adopt  our  proposals  that  require  carriers  to  identify  line  item  charges  associated  with  federal  regulatory 
 action  through  a  standard  industry-  wide  label  and  provide  full,  clear  and  non-  misleading  descriptions  of  the  nature  of  the  charges,  and  display  a  toll-  free  number  associated  with  the 
 charge  for  customer  inquiries.  While  we  adopt  guidelines  to  facilitate  consumer  understanding  of  these  charges  and  comparison  among  service  providers,  we  decline  the  recommendations  of 
 those  that  would  urge  us  to  limit  the  manner  in  which  carriers  recover  these  costs  of  doing  business. 


 51.  We  focus  particularly  on  three  types  of  line  items  that  have  appeared  on  consumers'  bills.  Specifically,  the  1996  Act  instructed  the  Commission  to  establish  support 
 mechanisms  to  ensure  that  all  Americans  have  access  to  affordable  telecommunications  services.  Pursuant  to  this  directive,  the  Commission  is  in  the  process  of  fundamentally  altering  the 
 manner  in  which  long  distance  carriers  pay  for  access  to  the  networks  of  local  carriers  and  for  supporting  the  universal  availability  of  telecommunications  services  at  just,  reasonable,  and 
 affordable  rates.  131  Although  the  Commission  did  not  direct  the  manner  in  which  carriers  could  recover  their  universal  service  contributions  or  access  fees  directly  from  their  customers,  132  and 
 substantially  reduced  the  access  rates  charged  to  long  distance  carriers  to  offset  their  new  universal  service  obligations,  133  some  carriers  began  including  on  their  customers'  bills  line  item 
 charges  purportedly  intended  to  recover  these  costs.  These  fees  have  been  charged  in  connection  with  consumers'  long  distance  service.  The  amounts  charged  and  the  name  describing  the 
 universal  service-  related  fees,  however,  have  varied  considerably  among  carriers.  For  example,  some  carriers  have  labelled  the  fee  as  "Universal  Connectivity  Charge,"  "Federal  Universal 
 Service  Fee,"  "Carrier  Universal  Service  Charge,"  and  even  "Local  Service  Subsidy,"  134  and  charges  have  ranged  from  $.  93  per  bill  to  5%  of  the  customers'  net  interstate  and  international 
 charges.  135  Access  related  charges  and  associated  names  have  likewise  varied  by  carrier.  136  The 
 131  See  Access  Charge  Reform,  First  Report  and  Order,  CC  Docket  No.  96-  262,  12  FCC  Rcd  15982  (1997) 
 (Access  Reform  Order);  Federal-  State  Joint  Board  on  Universal  Service,  Report  and  Order,  CC  Docket  No.  96-  45,  12  FCC  Rcd  8776  (1997)  (Universal  Service  Order). 


 132  See  Universal  Service  Order,  12  FCC  Rcd  at  9211;  Access  Reform  Order,  12  FCC  Rcd  at  16005. 
 133  The  Presubscribed  Interexchange  Carrier  Charge  (PICC)  is  the  charge  billed  by  interexchange  carriers  to 
 recover  a  portion  of  the  fees  paid  to  local  telephone  companies  for  access  to  their  networks. 
 134  Florida  Commission  comments  at  Attachment  A. 


 135  Id. 
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 nature  of  these  charges  is,  in  some  instances,  further  confused  because  different  charges  may  be  assessed  on  the  consumer's  "primary,"  or  first  line,  than  on  a  consumer's  subsequent  or  "non-primary" 
 lines.  137 
 52.  Local  exchange  carriers  have  also  chosen  to  assess  various  line  item  charges  associated  with  federal  regulatory  action.  Since  1985,  the  Commission  has  allowed  local 
 exchange  carriers  to  assess  a  "subscriber  line  charge,"  (SLC),  also  known  as  the  end-  user  common  line  charge.  This  charge  allows  local  exchange  carriers  to  recover  a  portion  of  the  costs 
 for  providing  local  loops.  138  More  recently,  pursuant  to  the  dictates  of  the  1996  Act,  the  Commission  permitted  local  exchange  carriers  to  recover  through  a  line-  item  charge  on  end-  user 
 bills  the  costs  associated  with  implementing  local  number  portability,  which  allows  a  consumer  to  retain  the  same  phone  number  when  changing  local  phone  companies.  139  This  local  number 
 portability  charge  first  appeared  on  some  consumers'  bills  in  February,  1999.  The  amount  of  the  charge,  however,  as  well  as  the  name  describing  it  varies  by  carrier  (e.  g.,  "number  portability 
 surcharge;"  "local  number  portability  service  charge;"  "federal  charge  -  service  provider  number  portability").  140 


 53.  The  record  in  this  proceeding  supports  our  concern  that  the  failure  of  carriers  to  label  and  accurately  describe  certain  line  item  charges  on  their  bills  has  led  to  increased 
 consumer  confusion  about  the  nature  of  these  changes.  141  Several  factors  appear  to  have 


 136  Some  labels  for  line-  item  charges  for  the  recovery  of  access  fees  include  "Carrier  Line  Charge,"  "National 
 Access  Fee,"  "Presubscribed  Line  Charge,"  and  "PIC  Charge."  Id. 
 137  Pursuant  to  our  access  charge  rules,  carriers  may  set  higher  caps  for  the  subscriber  line  charges  and 
 presubscribed  interexchange  carrier  charges  assessed  on  non-  primary  residential  lines  and  multi-  line  business  lines  than  on  primary  residential  lines  and  single  line  business  lines.  In  the  Primary  Lines  Order,  we  adopted 


 requirements  for  differentiating  and  identifying  such  lines  and  decided  to  consider  whether  to  require  carriers  to  provide  consumers  with  a  uniform  disclosure  statement  describing  the  distinction  between  primary  and  non-  primary 
 residential  lines  in  conjunction  with  this,  our  Truth-  in-  Billing  proceeding.  Defining  Primary  Lines,  Report  and  Order  &  Further  Notice  of  Proposed  Rulemaking,  CC  Docket  No.  97-  181,  1999  WL  125821  (1999)  (Primary  Lines 
 Order).  We  hereby  incorporate  the  comments  from  the  Primary  Lines  rulemaking  into  the  record  of  this  proceeding. 


 138  Id. 
 139  Telephone  Number  Portability,  Third  Report  and  Order,  CC  Docket  No.  95-  116,  13  FCC  Rcd  11701  (1998). 
 140  See  Jeannine  Aversa,  Yet  Another  New  Fee  Showing  Up  On  Telephone  Bills,  Associated  Press  Newswires, 
 Feb.  19,  1999. 
 141  See  Bills  Project  comments  at  4  (stating  that  "[  i]  n  general,  consumers  are  confused  by  the  various  taxes, 
 surcharges  and  other  charges  that  appear  on  their  bills");  NYCPB  comments  at  13  (stating  that  in  their  experience,  "many  consumers  are  confused  by  current  explanations  on  telephone  bills  concerning  access  charges  and  universal 
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 contributed  to  this  confusion.  The  names  associated  with  these  charges  as  well  as  accompanying  descriptions  (or  entire  lack  thereof)  may  convince  consumers  that  all  of  these  fees  are  federally 
 mandated.  142  In  addition,  a  lack  of  consistency  in  the  way  such  charges  are  labelled  by  carriers  makes  it  difficult  for  consumers  accurately  to  compare  the  price  of  telecommunications  services 
 offered  by  competing  carriers.  143 
 54.  In  the  Notice,  we  generally  sought  comment  on  the  methods  by  which  the  nature  and  purpose  of  these  charges  could  be  clarified.  1  We  adopt  the  guideline  proposed  in  our  Notice, 
 and  supported  by  the  great  majority  of  commenters,  1  that  line-  item  charges  associated  with  federal  regulatory  action  should  be  identified  through  standard  and  uniform  labels  across  the 
 industry.  We  agree  that  standardized  labels  will  promote  consumers'  ability  to  understand  their  bills,  thus  facilitating  their  ability  to  compare  rates  and  packages  among  competing  providers. 
 Such  comparisons  are  very  difficult  when  carriers  choose  different  names  for  the  same  charge.  1  In  considering  which  specific  labels  would  be  most  accurate,  descriptive  and  consumer-  friendly, 
 however,  we  believe  that  consumer  groups  are  particularly  well  suited  to  assist  in  the  development  of  the  uniform  terms.  Accordingly,  through  a  further  notice  in  this  proceeding,  we 
 encourage  consumer  and  industry  groups  to  come  together,  conduct  consumer  focus  groups,  and  propose  jointly  to  the  Commission  standard  labels  for  these  line  item  charges.  1  We  will  choose 
 the  standard  labels  based  on  the  suggestions  we  receive  in  response  to  our  Further  Notice. 
 56.  We  decline  to  take  a  more  prescriptive  approach  as  to  how  carriers  may  recover  these  costs.  We  recognize  that  several  commenters  assert  that  service  providers  should  be 


 service  fees."). 
 142  See,  e.  g.,  Vermont  Commission  comments  at  11  (stating  that  carriers  should  avoid  suggesting  that  a  charge 
 is  a  government  tax  on  the  consumer);  Maine  Commission  comments  at  8  (asserting  that  carriers  "should  be  required  to  clearly  and  unambiguously  state  that  the  surcharges  are  part  of  the  carrier's  rate  structure  and  are  not 


 mandated  by  any  regulatory  or  taxing  entity."). 
 143  See  AARP  comments  at  3  (arguing  that  consumers  must  be  able  to  compare  among  carriers  to  select  the 
 best  value,  but  making  comparisons  becomes  difficult  if  carriers  choose  different  names  for  the  same  charge). 
 144  Notice,  13  FCC  Rcd  at  18189-  90. 


 145  See,  e.  g.,  SBC  comments  at  21;  Missouri  Commission  comments  at  4;  Texas  Commission  comments  at  11; 
 AARP  comments  at  3;  NCL  comments  at  8;  NASUCA  reply  at  7. 
 146  See,  e.  g.,  Federal-  State  Joint  Board  on  Universal  Service,  Second  Recommended  Decision,  13  FCC  Rcd 
 24744,  24772  (1998)  (Second  Recommended  Decision)  (stating  that  "[  s]  tandard  nomenclature  could  benefit  consumers  by  having  common  language  across  carriers  so  that  consumers  can  easily  identify  the  charge."). 


 147  See  infra  at  section  III.  A. 
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 required  to  combine  all  regulatory  fees  into  one  charge,  148  or  should  be  prohibited  from  separating  out  any  fees  resulting  from  regulatory  action.  149  Other  commenters  urge  us  to  go  even 
 farther  and  require  carriers  to  include  on  bills  per-  minute  rates  that  include  all  fees  associated  with  the  service.  150  We  decline  at  this  time  to  mandate  such  requirements,  but  rather  prefer  to 
 afford  carriers  the  freedom  to  respond  to  consumer  and  market  forces  individually,  and  consider  whether  to  include  these  charges  as  part  of  their  rates,  or  to  list  the  charges  in  separate  line 
 items.  151  We  believe  that  so  long  as  we  ensure  that  consumers  are  readily  able  to  understand  and  compare  these  charges,  competition  should  ensure  that  they  are  recovered  in  an  appropriate 
 manner.  Moreover,  we  are  concerned  that  precluding  a  breakdown  of  line  item  charges  would  facilitate  carriers'  ability  to  bury  costs  in  lump  figures.  Insofar  as  the  regulatory-  related  charges 
 have  different  origins,  and  are  applied  to  different  service  and  provider  offerings,  we  also  question  whether  implementation  of  a  lump-  sum  figure  for  all  charges  resulting  from  federal 
 regulatory  action  could  be  presented  in  a  manner  in  which  consumers  could  clearly  understand  the  origin  of  such  a  charge.  On  the  other  hand,  we  recognize  that  consumers  may  benefit  from  a 
 simplified,  total  charge  approach.  As  a  result,  we  encourage  industry  and  consumer  groups  to  consider  further  whether  some  categorization  and  aggregation  of  charges  would  be  advisable. 
 For  example,  we  seek  further  comment  on  whether  the  line  item  charges  associated  with  long  distance  service  could  be  or  should  be  identified  as  a  single,  uniformly  described,  charge,  while 
 those  charges  associated  with  local  service  be  identified  by  a  separate  standardized  term.  Our  goal  is  to  enable  consumers  to  make  comparisons  among  different  service  providers  in 
 connection  with  these  charges,  but  we  expect  that  this  end  will  be  accomplished  though  several  means. 


 57.  Although  we  adopt  the  guideline  that  charges  be  identified  through  standard  labels,  carriers  may  nevertheless  choose  to  include  additional  language  further  describing  the 
 charges.  We  are  persuaded  by  the  record  not  to  adopt  any  particular  "safe-  harbor"  language,  as 


 148  California  Commission  comments  at  7-  8. 
 149  Minnesota  OAG  comments  at  11-  12.  See  also  RUS  reply  at  2  (stating  that  "[  e]  fforts  to  break  out  new  line 
 items  as  universal  service  fees  or  taxes  are  misleading  to  consumers,  particularly  since  none  of  the  other  costs  of  business,  such  as  advertising,  stock  options,  or  salaries,  are  highlighted  in  this  manner.  .  .  A  separate  line  item 


 charge  for  universal  service  may  disguise  a  rate  increase,  or  allow  a  carrier  to  advertise  an  apparently  low  per-  minute  rate,  a  rate  [that]  doesn't  actually  exist  once  the  line  item  is  added  to  the  bill."). 


 150  For  example,  NASUCA  proposes  that  carriers  be  required  to  disclose  the  average  per  line  universal  service 
 and  access  charges  on  the  same  page  as  a  customer's  individual  statement  of  universal  service  and  access  charge-related  line  items.  See  NASUCA  comments  at  19. 


 151  Century  reply  at  8  (stating  that  "[  c]  arriers  should  have  the  freedom  to  respond  to  consumer  demand  and 
 market  place  forces  in  determining  whether  to  include  these  charges  as  part  of  their  rates,  to  bundle  the  charges  as  one  line  item  or  to  list  the  charges  in  separate  line  items."). 
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 set  forth  in  the  Notice,  or  mandate  specific  disclosures.  152  Rather,  we  believe  carriers  should  have  broad  discretion  in  fashioning  their  additional  descriptions,  provided  only  that  they  are 
 factually  accurate  and  non-  misleading.  For  example,  for  purposes  of  good  customer  relations,  a  carrier  may  wish  to  elaborate  on  the  nature  and  origin  of  its  universal  service  charge.  A  full, 
 accurate  and  non-  misleading  description  of  the  charge  would  be  fully  consistent  with  our  guideline.  In  contrast,  we  would  not  consider  a  description  of  that  charge  as  being  "mandated" 
 by  the  Commission  or  the  federal  government  to  be  accurate.  Instead,  it  is  the  carriers'  business  decision  whether,  how,  and  how  much  of  such  costs  they  choose  to  recover  directly  from 
 consumers  through  separately  identifiable  charges.  153  Accordingly,  to  state  or  imply  that  the  carrier  has  no  choice  regarding  whether  or  not  such  a  charge  must  be  included  on  the  bill  or  the 
 amount  of  the  charge  would  be  misleading.  154  Our  view  is  consistent  with  the  recent  decision  of  the  Federal-  State  Joint  Board  on  Universal  Service  which  recommended  that  the  Commission 
 "prohibit  carriers  from  depicting  [universal  service]  charges  as  .  .  .  mandated  by  the  Commission  or  the  federal  government  by  terms  or  placement  on  the  bill."  155 


 58.  In  the  Notice,  we  sought  comment  on  whether  it  is  a  violation  of  section  201(  b)  for  a  carrier  to  bill  customers  for  more  than  their  pro  rata  share  of  universal  service  and  access 


 152  Notably,  several  commenters  state  that  such  language  may  be  regarded  as  de  facto  mandatory,  and  that  it 
 would  be  difficult  to  script  language  that  would  be  relevant  to  all  carriers  in  all  situations.  See  MCI  comments  at  38-  39;  Qwest  comments  at  7;  Paging  Network  reply  at  4. 


 153  See  Bills  Project  comments  at  5;  Detecon  comments  at  4;  Kansas  Commission  comments  at  6; 
 Pennsylvania  Commission  comments  at  8.  Some  commenters  suggest  that  the  Commission  should  eliminate  carriers'  discretion  as  to  how  they  recover  universal  service  contributions,  and  require  instead  that  contributions  be 


 recovered  through  federally  mandated  surcharges.  See  AT&  T  comments  to  Second  Recommended  Decision  at  9;  Ameritech  comments  to  Second  Recommended  Decision  at  11;  U  S  West  comments  to  Second  Recommended 
 Decision  at  15.  The  Commission  previously  considered  and  rejected  this  approach  in  the  Universal  Service  Order.  Universal  Service  Order,  12  FCC  Rcd  at  9210-  11.  Based  on  recommendations  from  the  Joint  Board,  we  concluded 
 that,  in  a  competitive  telecommunications  market,  carriers  should  be  allowed  to  decide  how  they  should  recover  their  contributions,  and  mandatory  recovery  through  an  end-  user  surcharge  would  eliminate  carriers'  pricing 
 flexibility  to  the  detriment  of  consumers.  Id.  In  its  Second  Recommended  Decision,  the  Joint  Board  reaffirmed  its  recommendation  that  carriers  should  have  the  flexibility  to  decide  how  they  recover  their  universal  service 
 contributions.  Second  Recommended  Decision,  13  FCC  Rcd  at  24,771.  We  find  no  compelling  reason  to  depart  from  our  earlier  conclusions  or  the  Joint  Board's  recommendations  regarding  this  issue. 


 154  See,  e.  g.,  NCL  comments  at  8;  Maine  Commission  comments  at  7-  8.  See  also  RUS  reply  at  2;  Wisconsin 
 Commission  comments  at  5. 
 155  Second  Recommended  Decision,  13  FCC  Rcd  at  24770.  In  the  Universal  Service  Order,  the  Commission 
 determined  that  it  would  be  misleading  for  carriers  to  characterize  their  universal  service  contributions  as  a  surcharge,  because  carriers  retain  the  flexibility  to  structure  the  recovery  of  the  costs  of  universal  service  in  many 


 ways.  Universal  Service  Order,  12  FCC  Rcd  at  9211-  12. 
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 fees.  156  Additionally,  in  the  Second  Recommended  Decision,  the  Joint  Board  recommended  that  the  Commission  consider  adopting  a  rule  restricting  a  carrier  from  charging  a  line  item 
 assessment  in  an  amount  greater  than  the  carrier's  universal  service  assessment  rate.  157  We  decline,  however,  to  adopt  specific  rules  addressing  these  concerns.  Some  commenters  assert 
 that  it  may  be  impractical  accurately  to  allocate  some  line-  item  charges  to  an  individual  customer  on  a  per-  bill  basis.  158  For  example,  a  carrier's  universal  service  contributions  may  depend  on 
 variables  whose  values  are  not  known  at  the  time  the  carrier  issues  a  bill,  such  as  the  total  revenue  contribution  base  of  all  carriers  and  the  high-  cost  and  low-  income  projections  for 
 universal  service  support.  159  At  least  one  commenter  argues  that  carriers  should  be  allowed  to  account  for  uncollectibles,  billing  expenses,  and  administrative  expenses  in  setting  the  amount  of 
 their  line  item  assessments  for  universal  service.  160  Although  we  decline  to  adopt  specific  rules  here,  we  caution  that  we  will  not  hesitate  to  take  action  on  a  case-  by-  case  basis  under  section 
 201(  b)  of  the  Act  against  carriers  who  impose  unjust  or  unreasonable  line-  item  charges.  161 
 59.  We  also  decline  suggestions  to  require  carriers  to  provide  a  detailed  breakdown  of  their  costs  and  cost  reductions  on  their  customer  bills.  162  The  purpose  behind  these  proposals  in 
 the  Notice  was  to  enhance  consumers'  understanding  of  the  costs  of  telecommunications  services,  thereby  increasing  their  ability  to  determine  whether  such  services  are  fairly  priced. 
 For  example,  as  we  reduce  the  cap  on  access  charges  assessed  by  LECs  against  IXCs,  it  would 


 156  See  Notice,  13  FCC  Rcd  at  18,190. 
 157  See  Second  Recommended  Decision,  13  FCC  Rcd  at  24771. 
 158  See  SBC  comments  at  20;  Air  Touch  comments  at  7;  Nextel  reply  at  5-  6. 
 159  Omnipoint  comments  at  14-  15;  PCIA  comments  at  15-  16;  Nextel  reply  at  5-  6. 
 160  MCI  comments  to  Second  Recommended  Decision  at  20-  21. 
 161  47  U.  S.  C.    201(  b). 
 162  We  asked  for  comment  on  a  number  of  related  proposals  requiring  carriers  to  disclose  or  explain  particular 
 costs  in  their  monthly  bills.  Specifically,  we  asked:  (1)  whether  long  distance  carriers  that  include  a  separate  line  item  for  the  recovery  of  universal  service  contributions  should  be  required  to  explain  the  net  reduction  in  their  costs 


 of  providing  long  distance  service  since  enactment  of  the  1996  Act;  (2)  whether  carriers  attributing  line  items  to  new  government  action  should  be  required  to  disclose  exact  cost  reductions,  such  as  reduction  in  access  charge 
 costs,  or  other  related  benefits  arising  from  government  action;  (3)  whether  carriers  who  assess  a  PICC  should  be  required  to  show  whether  the  corresponding  reduction  in  the  per-  minute  rate  was  actually  passed  on  to  each 
 individual  consumer;  (4)  whether  carriers  should  include  the  exact  cost  of  PICC  and  universal  service  obligations  incurred  as  a  result  of  serving  that  customer;  and  (5)  whether  it  would  be  helpful  to  consumers  if  carriers  were 
 required  to  explain  in  customer  bills  their  reasons  for  assessing  a  flat  fee  or  percentage  charge  to  recover  amounts  that  exceed  the  costs  the  carrier  incurs.  Notice,  13  FCC  Rcd  at  18189-  90. 
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 be  useful  for  an  individual  consumer  to  be  informed  of  the  extent  to  which  his  or  her  IXC  passes  those  access  charge  reductions  through  to  the  consumer  in  the  form  of  lower  long  distance  rates, 
 and  to  be  able  to  make  comparisons  between  IXCs  on  this  basis.  We  agree,  however,  that  long  explanations  of  a  carrier's  cost  calculations  may  add  complexity  to  telephone  bills,  creating 
 confusion  that  outweighs  the  benefits  of  providing  such  descriptions.  163  For  these  reasons,  we  also  decline  to  adopt  specific  language  describing  the  distinction  between  primary  and  non-primary 
 residential  lines.  We  conclude  that  LECs  may  craft  their  own  descriptions  to  convey  the  Commission's  primary/  non-  primary  definition  to  their  customers,  provided  that  the  information 
 is  conveyed  truthfully  and  accurately.  164  We  believe,  however,  that  our  purpose  of  enhancing  consumers'  understanding  will  be  adequately  met  through  the  guidelines  adopted  herein.  Indeed, 
 we  expect  that  standard  identification  of  the  charges  associated  with  federal  regulatory  action,  in  conjunction  with  accurate  and  non-  misleading  descriptions,  will  enable  market  forces  to  reduce 
 these  charges  to  their  most  economically  efficient  level.  165  In  addition,  we  note  that  unjust  or  unreasonable  line-  item  charges  are  also  subject  to  challenge  pursuant  to  section  201(  b)  of  the 
 Act.  166 
 60.  We  decline  to  specify  any  periodic  notification  to  consumers  providing  additional  explanation  of  any  charges  resulting  from  federal  regulatory  action.  167  We  believe  our  guideline 
 requiring  standard  labels  for  such  charges  should,  even  without  further  non-  misleading  description,  provide  consumers  with,  at  minimum,  notice  of  these  charges.  In  this  regard,  we 
 point  out  that  such  line-  item  charges,  like  all  other  charges  on  the  bill,  are  subject  to  our  guideline  requiring  the  prominent  display  of  a  toll-  free  number  for  consumer  inquiries  and 
 disputes.  168  We  emphasize  that  carriers'  customer  service  representatives  must  be  prepared  to 
 163  See  SBC  comments  at  21  (stating  that  customers  want  shorter,  simpler  bills,  not  bills  that  attempt  to  explain 
 the  history  of  telephone  regulation  and  the  cost  basis  for  all  of  the  charges  shown  on  the  bill). 
 164  GTE  comments  at  17-  18  (filed  in  CC  Docket  No.  97-  181). 


 165  See,  e.  g.,  Sprint  comments  at  18-  19  (stating  that  "the  Commission  can  and  should  rely  upon  market  forces 
 to  determine  long  distance  rate  levels  and  to  ensure  that  IXCs  pass  through  any  access  charge  reductions."). 
 166  47  U.  S.  C.    201(  b).  We  decline,  however,  to  find  that  it  is  a  per  se  violation  of  section  201(  b)  for  a  carrier 
 to  bill  customers  for  more  than  their  pro  rata  share  of  universal  service  and  access  fees.  See  Notice,  13  FCC  Rcd  at  18190.  Some  commenters  assert  that  it  may  be  impractical  to  allocate  accurately  some  line-  item  charges  to  an 


 individual  customer  on  a  per-  bill  basis.  See  SBC  comments  at  20;  Air  Touch  comments  at  7;  Nextel  reply  at  5-  6.  For  example,  a  carrier's  universal  service  contributions  may  depend  on  variables  whose  values  are  not  known  at  the 
 time  the  carrier  issues  a  bill,  such  as  the  total  revenue  contribution  base  of  all  carriers  and  the  high-  cost  and  low-income  projections  for  universal  service  support.  Omnipoint  comments  at  14-  15;  PCIA  comments  at  16;  Nextel 
 reply  at  5-  6. 
 167  See  Notice,  13  FCC  Rcd  at  18190. 


 168  See  infra  Section  II(  C)(  3)  (Clear  and  Conspicuous  Disclosure  of  Inquiry  Contacts). 
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 explain  fully  the  nature  and  purpose  of  these  charges  if  asked  to  do  so.  169  We  believe  that  the  requirements  adopted  here  strike  a  reasonable  balance  between  the  needs  of  consumers  for 
 access  to  accurate  and  truthful  information  regarding  these  line-  item  charges  and  any  burden  or  cost  that  such  requirements  may  impose  on  carriers. 


 61.  In  balancing  the  legitimate  interest  of  consumers  and  carriers,  we  reject  suggestions  that  standardized  labels  would  violate  the  First  Amendment.  We  therefore  disagree 
 with  ACTA's  comment  that  the  Commission  cannot  discourage  use  of  other  line-  item  labels  "as  a  matter  of  constitutional  law,"  if  such  descriptions  are  accurate.  170  We  emphasize  that  we  have 
 not  mandated  or  limited  specific  language  that  carriers  utilize  to  describe  the  nature  and  purpose  of  these  charges;  each  carrier  may  develop  its  own  language  to  describe  these  charges  in  detail. 
 Commercial  speech  that  is  misleading  is  not  protected  speech  and  may  be  prohibited.  171  Furthermore,  commercial  speech  that  is  only  potentially  misleading  may  be  restricted  if  the 
 restrictions  directly  advance  a  substantial  governmental  interest  and  are  no  more  extensive  than  necessary  to  serve  that  interest.  172  Finally,  commercial  speech  that  is  neither  actually  nor 
 potentially  misleading  may  be  regulated  if  the  government  satisfies  a  three-  pronged  test:  first,  the  government  must  assert  a  substantial  interest  in  support  of  its  regulation;  second,  the  government 
 must  demonstrate  that  the  restriction  on  commercial  speech  directly  and  materially  advances  that  interest;  and  third,  the  regulation  must  be  "narrowly  drawn."  173  As  explained  below,  our 
 requirement  that  carriers  use  standard  terms  to  label  charges  resulting  from  federal  regulatory  action  passes  this  three-  prong  test. 


 62.  First,  the  government's  interest  in  standardized  labelling  is  substantial.  The  ultimate  goal  of  our  regulation  is  to  ensure  that  consumers  pay  fair  and  efficient  rates,  an  interest 
 the  Supreme  Court  found  to  be  substantial  in  Central  Hudson.  174  As  the  record  in  this  proceeding  demonstrates,  line-  item  charges  are  being  labelled  in  ways  that  could  mislead 
 consumers  by  detracting  from  their  ability  to  fully  understand  the  charges  appearing  on  their  monthly  bills,  thereby  reducing  their  propensity  to  shop  around  for  the  best  value.  Consumers 


 169  In  addition,  customer  service  representatives  should  give  the  caller  the  option  of  obtaining  a  hard  copy  of  the 
 descriptions  of  these  charges  via  the  Internet  or  regular  mail,  or  both,  according  to  the  preference  of  the  customer. 
 170  ACTA  comments  at  8. 


 171  Central  Hudson  Gas  &  Electric  Corp.  v.  Public  Service  Commission,  447  U.  S.  557,  563-  564  (1980) 
 (Central  Hudson). 
 172  Id.  at  566. 


 173  Id. 
 174  Id.  at  568. 
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 misled  into  believing  that  these  charges  are  federally  mandated,  or  that  the  amounts  of  the  charges  are  established  by  law  or  government  action,  could  decide  that  such  shopping  would  be 
 futile.  In  addition,  lack  of  standard  labelling  could  make  comparison  shopping  infeasible.  Unlike  most  products  purchased  by  consumers,  these  line-  item  charges  cannot  be  attributed  to 
 individual  tangible  articles  of  commerce.  For  example,  when  a  consumer  purchases  socks  from  the  local  department  store,  the  consumer  knows  what  item  the  bill  refers  to,  whether  it  describes 
 the  product  as  socks,  men's  wear,  hosiery,  etc.  In  contrast,  a  consumer  receives  no  tangible  product  in  conjunction  with  a  line-  item  charge  on  his  or  her  telecommunications  bill.  If  one 
 carrier  labels  this  charge,  for  example,  as  "Access  Charge,"  and  another  uses  the  term  "FCC-Mandated  Charge,"  a  consumer  will  be  unable  to  discern  that  these  labels  refer  to  the  same 
 charges.  This  impedes  the  consumer's  ability  to  compare  and  contrast  telecommunications  services  offered  by  competing  entities.  The  government's  interest  is  substantial  in  preventing 
 fraudulent  and  misleading  practices  by  carriers  and  ensuring  that  consumers  are  able  to  make  intelligent  and  well  informed  commercial  decisions  in  the  increasingly  competitive 
 telecommunications  market  that  the  1996  Telecommunications  Act  is  intended  to  foster.  Moreover,  consumers  have  a  First  Amendment  interest  in  obtaining  information  on  which  to 
 base  a  decision  whether  to  buy  a  product,  and  this  interest  is  "served  by  insuring  that  the  information  is  not  false  or  deceptive."  175 


 63.  Second,  the  proposed  regulation  directly  advances  the  governmental  interest.  The  proposed  regulation  will  ensure  that  the  labels  assigned  to  charges  related  to  federal  regulatory 
 action  are  consistent,  understandable,  and  do  not  confuse  or  mislead  consumers.  In  addition,  the  regulatory  scheme  will  encourage  carriers  to  provide  consumers  with  information  that  will 
 enable  them  to  understand  their  telecommunications  bills,  and  prevent  carriers  from  misleading  consumers  into  believing  they  cannot  "shop  around"  to  find  carriers  that  charge  less  for  fees 
 resulting  from  federal  regulatory  action. 
 64.  When  they  take  effect,  following  selection  of  standardized  labels,  our  labelling  regulations  will  be  narrowly  drawn  to  be  no  more  extensive  than  necessary  to  serve  the 
 government's  interest.  Narrow  tailoring  requires  a  reasonable  fit  between  regulatory  ends  and  means:  "[  n]  ot  necessarily  the  single  best  disposition  but  one  whose  scope  is  'in  proportion  to  the 
 interest  served.  '"  176  The  requirement  that  we  adopt  --  requiring  telecommunications  carriers  to  use  specified,  uniform  labels  to  identify  charges  resulting  from  federal  regulatory  action  --  is 
 narrowly  tailored  to  meet  this  substantial  government  interest  and  does  not  appreciably  affect 
 175  National  Commission  on  Egg  Nutrition  v.  FTC,  570  F.  2d  157,  162  (7th  Cir.  1977),  cert.  denied,  439  U.  S.  821 
 (1978). 
 176  Board  of  Trustees  v.  Fox,  492  U.  S.  469,  480  (1989)  (citing  In  re  R.  M.  J.,  455  U.  S.  191,  203  (1982));  see  also 
 Ward  v.  Rock  Against  Racism,  109  S.  Ct.  2746,  2758  (1989)  (a  regulation  is  narrowly  tailored  if  government  interest  would  be  achieved  less  effectively  without  the  regulation). 
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 carriers'  ability  to  describe  fully  the  nature  and  purpose  of  these  charges  in  their  own  words.  As  stated  above,  we  have  not  mandated  or  limited  specific  language  that  carriers  utilize  to  describe 
 the  nature  and  purpose  of  these  charges:  each  carrier  may  develop  its  own  language  to  describe  these  charges  in  detail.  We  only  prescribe  that  these  charges  be  presented  using  a  standardized 
 label,  so  that  consumers  can  comparison  shop.  Our  standardized  label  requirement  is  analogous  to  the  disclosure  requirements  of  the  Truth  in  Lending  Act  (TILA).  177  TILA  and  its 
 implementing  regulations  require,  for  example,  that  creditors  in  consumer  credit  transactions  disclose  the  amount  financed  and  provide  descriptive  explanations  of  the  applicable  annual 
 percentage  rate  as  specified  by  the  Federal  Reserve  Board.  178  Although  disclosure  of  the  annual  percentage  rate  must  meet  detailed  requirements  governing  how  it  will  be  stated  and  calculated, 
 these  requirements  have  not  been  challenged  as  contrary  to  the  First  Amendment.  Our  standardized  label  requirement  is  even  less  onerous,  requiring  carriers  to  use  the  labels,  but 
 otherwise  leaving  them  free  to  determine  how  best  to  describe  charges  related  to  federal  regulatory  action  in  a  truthful  and  nonmisleading  manner.  The  government  interest  underlying 
 the  standardized  label  requirement  is  also  analogous  to  that  underlying  the  Truth  in  Lending  Act.  The  purpose  of  that  statute  is  "to  assure  a  meaningful  disclosure  of  credit  terms  so  that  the 
 consumer  will  be  able  to  compare  more  readily  the  various  credit  terms  available  to  him  .  .  .  and  to  protect  the  consumer  against  inaccurate  and  unfair  credit  billing  and  credit  card  practices."  179 
 Similarly,  the  principles  that  we  adopt  here  seek  to  protect  consumers  from  unreasonable  billing  practices  while  enabling  them  to  make  informed  choices  in  the  increasingly  competitive 
 telecommunications  market  that  the  Telecommunications  Act  of  1996  is  intended  to  foster. 
 65.  Finally,  several  commenters  argue  that  44  Liquormart  v.  Rhode  Island  180  prevents  us  from  requiring  carriers  to  employ  standard  labels  for  charges  resulting  from  federal  regulatory 
 action.  We  disagree.  In  44  Liquormart,  the  Supreme  Court  struck  down  a  ban  on  all  dissemination  of  price  advertising  for  alcoholic  beverages  on  First  Amendment  grounds.  Here, 
 however,  we  ban  no  speech,  so  carriers  remain  free  to  develop  their  own  descriptions  of  the  nature  and  purpose  of  these  charges,  subject  only  to  a  labelling  requirement.  For  this  reason,  44 
 Liquormart  is  inapposite.  Accordingly,  we  conclude  that  our  regulation  is  valid  under  the  limited  scrutiny  that  has  been  afforded  restrictions  on  commercial  speech. 


 3.  Clear  and  Conspicuous  Disclosure  of  Inquiry  Contacts 


 177  15  U.  S.  C.    1601  et  seq. 
 178  15  U.  S.  C.    1606,  1638. 
 179  15  U.  S.  C.    1601(  a);  Mourning  v.  Family  Publications  Service,  Inc.,  411  U.  S.  356,  363,  365  (1973). 
 180  116  S.  Ct.  1495  (1996)  (44  Liquormart). 
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 66.  The  final  fundamental  truth-  in-  billing  principle  we  adopt  is  that  consumers  must  have  the  necessary  tools  to  challenge  charges  for  unauthorized  services.  We  conclude  that 
 carriers  must  prominently  display  on  their  monthly  bill  a  toll-  free  number  or  numbers  by  which  customers  may  inquire  or  dispute  any  change  on  that  bill.  181  This  telephone  number  shall  be 
 provided  in  a  clear  and  conspicuous  manner,  so  that  the  customer  can  easily  identify  the  appropriate  number  to  use  to  inquire  about  each  charge.  182  We  are  cognizant,  however,  that  the 
 service  provider  is  not  necessarily  the  most  appropriate  entity  for  consumers  to  call.  A  service  provider  may,  for  example,  contract  with  the  LEC  or  an  independent  billing  aggregator  to 
 provide  inquiry  and  dispute  resolution  services  for  charges  billed  through  the  local  telephone  bill.  A  carrier  may  list  a  toll-  free  number  for  a  billing  agent,  clearinghouse,  or  other  third  party, 
 provided  that  such  party  possesses  sufficient  information  to  answer  questions  concerning  the  customer's  account  and  is  fully  authorized  to  resolve  consumer  complaints  on  the  carrier's  behalf. 
 This  will  enable  customers  to  avoid  feeling  that  they  are  "getting  the  run  around."  We  decline  to  require  carriers  to  provide  a  business  address  on  each  telephone  bill  for  the  receipt  of  consumer 
 inquiries  and  complaints.  As  several  commenters  have  noted,  most  customers  call  when  they  have  questions  --  they  do  not  write.  183  Accordingly,  the  inclusion  of  a  business  address  will  not 
 significantly  enhance  consumers'  ability  to  contact  the  billing  entity.  We  do  require,  however,  that  each  carrier  make  its  business  address  available  upon  request  to  consumers  through  its  toll-free 
 number,  for  those  consumers  who  wish  to  follow  up  their  complaint  or  inquiry  in  writing.  184 
 67.  We  conclude  that  conspicuous  display  of  a  toll-  free  inquiry  and  dispute  resolution  number  is  an  essential  linchpin  to  consumers'  exercise  of  the  rights  we  seek  to  protect  in  this 
 Order,  as  well  as  in  other  proceedings  such  as  our  new  slamming  rules.  185  Consumers  often 
 181  BellSouth  comments  at  9-  10  (stating  that  each  provider  of  billed  services  should  include  on  the  bill  page  a 
 toll-  free  telephone  number  which  consumers  may  contact  to  obtain  information  and/  or  register  a  complaint);  U  S  West  comments  at  23  (asserting  that  it  would  be  helpful  to  a  consumer  to  have  a  phone  number  associated  with 


 every  service  provider,  yet  the  number  should  not  necessarily  be  that  of  the  service  provider  itself,  but  should  be  a  number  that  can  handle  inquiries  on  behalf  of  the  service  provider  and  provide  customer  resolution  of  disputes). 
 See  also  Ameritech  comments  at  16;  AT&  T  comments  at  14-  15;  Sprint  comments  at  21;  C&  W  comments  at  12;  Excel  comments  at  14;  NYCPB  comments  at  14;  Wisconsin  Commission  comments  at  6;  Missouri  Commission 
 comments  at  4-  5;  Maine  Commission  comments  at  8;  Ohio  Commission  comments  at  11;  Washington  Commission  Staff  comments  at  7;  NCL  comments  at  9;  USTA  comments  at  8. 


 182  The  toll-  free  number  should  be  accessible  to  persons  with  disabilities.  For  example,  the  carrier  could  either 
 have  a  toll-  free  TTY  line,  or  their  toll-  free  line  should  not  have  barriers  to  TRS  service. 
 183  See,  e.  g.,  Bell  Atlantic  comments  at  13. 


 184  Carriers  should  also  provide  an  e-  mail  address  so  that  their  customers  will  have  the  option  of  communicating 
 with  the  carrier  via  electronic  mail. 
 185  See  supra  1998  Slamming  Order  and  Further  Notice. 
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 experience  considerable  difficulty  in  contacting  the  entity  whose  charges  appear  on  the  telephone  bill.  186  This  results  in  delayed  resolution  of  billing  problems,  often  necessitating  the  intervention 
 of  other  parties  such  as  the  LEC,  the  state  public  service  commission,  or  the  Commission.  Requiring  that  each  telephone  bill  include  at  a  minimum  a  toll-  free  telephone  number  for  the 
 receipt  of  consumer  inquiries  and  complaints  will  minimize  customer  confusion  regarding  charges  on  telephone  bills  and  enable  consumers  to  resolve  their  billing  disputes  easily  and 
 promptly.  187 
 68.  We  decline  at  this  time  to  adopt  standards  for  the  provision  of  accurate  information  by  carrier  customer  service  representatives.  188  We  expect  such  personnel  to  be  well-trained 
 and  that  the  number  of  employees  is  sufficient  to  handle  call  volumes,  and  we  assume  that  competition  will  provide  a  strong  incentive  for  each  carrier  to  set  appropriate  standards  on 
 its  own  initiative.  Although  we  decline  to  mandate  any  particular  standards  for  customer  service,  we  remind  carriers  that  the  intentional  provision  of  untruthful  or  misleading  information  to  a 
 customer  regarding  the  nature  and  purpose  of  charges  or  fees  would  constitute  a  violation  of  section  201(  b)  of  the  Act.  189 


 III.  FURTHER  NOTICE  OF  PROPOSED  RULEMAKING 
 A.  Discussion 
 1.  Application  of  Rules  to  CMRS  Carriers 
 69.  As  we  indicated  in  the  Order,  we  seek  comment  on  whether  the  remaining  truth-in-  billing  rules  we  adopt  in  the  wireline  context  should  apply  to  CMRS  carriers.  More 
 specifically,  we  seek  comment  on  whether  such  rules  should  be  imposed  on  CMRS  carriers  in  order  to  protect  consumers.  As  we  stated  in  the  Order,  we  believe  that  all  consumers  expect  and 
 should  receive  bills  that  are  fair,  clear,  and  truthful.  However,  absent  evidence  that  there  is  a  problem  with  wireless  bills,  it  might  not  be  necessary  to  apply  the  remaining  rules  in  the  CMRS 
 context.  Commenters  may  wish  to  address  the  applicability  of  a  section  10  forbearance  analysis.  Those  commenters  who  wish  to  apply  such  an  analysis  should  address  the  specific  elements  of 
 the  standard  set  forth  in  section  10.  190  We  also  seek  comment  on  the  extent  to  which  the 


 186  See,  e.  g.,  Washington  Commission  Staff  comments  at  7. 
 187  See,  e.  g.,  Ohio  Commission  comments  at  11. 
 188  See  Notice,  13  FCC  Rcd  at  18191. 
 189  47  C.  F.  R.    201(  b). 
 190  Under  Section  10,  the  Commission  shall  forbear  from  applying  any  regulation  to  a  telecommunications 
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 presence  of  a  competitive  market  is  relevant  to  consumers'  ability  to  protect  themselves  from  the  harms  we  address  here. 
 70.  We  also  note  growing  evidence  that  some  consumers  are  substituting  wireless  for  wireline  service.  191  To  what  extent  does  this  phenomenon  affect  our  application  of  our 
 guidelines  to  wireless  providers?  We  also  seek  comment  more  generally  on  the  benefit  that  consumers  would  derive  from  application  of  certain  of  the  guidelines  relative  to  the  burden  that 
 such  application  would  impose  on  CMRS  carriers.  First,  as  we  indicated  in  the  Order,  all  consumers  are  entitled  to  fair,  clear,  and  reasonable  practices.  We  seek  comment  on  how  to 
 implement  this  principle  in  the  CMRS  context.  For  instance,  we  seek  comment  on  the  current  billing  practices  of  CMRS  providers,  including  the  types  and  descriptions  of  charges  CMRS 
 providers  include  in  their  bills. 
 71.  Second,  we  seek  comment  on  whether  identifying  new  service  providers  and  "deniable"  charges  makes  sense  in  the  wireless  context.  For  example,  because  CMRS  carriers 
 are  excluded  from  equal  access  obligations,  192  it  appears  that  CMRS  carriers  will  rarely  if  ever 


 carrier  or  class  of  carriers  if  the  Commission  determines  that  -- 
 (1)  enforcement  of  such  regulation  or  provision  is  not  necessary  to  ensure  that  the  charges,  practices,  classifications,  or  regulations  by,  for,  or  in  connection  with  that 
 telecommunications  carrier  or  telecommunications  service  are  just  and  reasonable  and  are  not  unjustly  or  unreasonably  discriminatory; 
 (2)  enforcement  of  such  regulation  or  provision  is  not  necessary  for  the  protection  of  consumers;  and 
 (3)  forbearance  from  applying  such  provision  or  regulation  is  consistent  with  the  public  interest. 
 With  respect  to  the  public  interest  analysis,  the  Commission  must  also  consider  whether  forbearance  from  enforcing  the  provision  or  regulation  will  promote  competitive  market  conditions,  including  the  extent  to  which  such 
 forbearance  will  enhance  competition  among  providers  of  telecommunications  services.  If  the  Commission  determines  that  such  forbearance  will  promote  competition  among  providers  of  telecommunications  services,  that 
 determination  may  be  the  basis  for  a  Commission  finding  that  forbearance  is  in  the  public  interest. 
 191  See  Annual  Report  and  Analysis  of  Competitive  Market  Conditions  With  Respect  to  Commercial  Mobile 
 Services,  13  FCC  Rcd  19746,  19817  (1998)  (noting  that  mobile  telephone  operators  are  beginning  .  .  .  to  position  their  services  as  true  replacements  for  the  wire-  based  services  of  LECs);  Id.  at  19819  (The  Commission  should 


 hasten  the  day  when  consumers  begin  to  view  wireless  as  a  real  substitute  for  wireline,  and  not  just  a  complement.)  (Separate  Statement  of  Chairman  William  E.  Kennard).  But  see  Application  of  BellSouth  Corporation,  BellSouth 
 Telecommunications,  Inc.,  and  BellSouth  Long  Distance,  Inc.  for  Provision  of  In-  Region,  InterLATA  Services  in  Louisiana,  CC  Docket  No.  98-  121  (rel.  Oct.  13,  1998)  at  para.  43  (noting  that  BellSouth's  wireline  customers, 
 particularly  residential  customers,  are  unlikely  to  switch  to  wireless  service  as  a  competitive  alternative  to  wireline  because  of  rate  structure  involved). 


 192  1998  Slamming  Order  and  Further  Notice  at    85. 
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 be  required  to  indicate  a  new  long  distance  service  provider  on  the  bill.  Similarly,  CMRS  carriers  indicate  in  their  comments  that,  unlike  the  practice  in  connection  with  billing  for 
 wireline  carriers  that  can  give  rise  to  cramming,  CMRS  carriers  do  not  at  this  time  include  charges  for  services  rendered  by  third  party  entities.  193  We  seek  comment  on  these  assertions. 
 Do  CMRS  providers  bill  for  any  other  service  providers?  If  so,  for  what  types  of  services  and  how  pervasive  are  these  billing  practices?  Likewise,  CMRS  carriers,  as  non-  LECs,  that  do  their 
 own  billing  do  not  have  to  distinguish  between  "deniable"  and  "nondeniable"  charges  because  non  payment  of  charges  on  a  CMRS  bill  would  not  result  in  termination  of  basic  local  wireline 
 service.  194  Therefore,  our  guideline  to  identify  "deniable"  charges  may  have  no  relevance,  and  add  no  benefit,  to  consumers'  CMRS  bills.  195 


 193  PCIA  comments  at  7;  RCA  comments  at  2;  Air  Touch  comments  at  2;  Nextel  comments  at  2. 
 194  See  supra  Section  II(  C)(  2)(  b). 
 195  We  recognize,  however,  that  billing  for  CMRS  may  change  or  evolve  from  current  practices. 
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 2.  Standard  Labels  for  Line-  Item  Charges 
 72.  As  discussed  in  section  II(  C)(  2)(  c),  we  adopt  the  guideline  that  carriers  must  use  standardized  labels  to  refer  to  certain  charges  relating  to  federal  regulatory  action.  We  seek 
 comment,  however,  on  the  specific  labels  that  carriers  should  adopt.  We  tentatively  conclude  that  the  following  labels  would  be  appropriate:  "Long  Distance  Access"  to  identify  charges 
 related  to  interexchange  carriers'  costs  for  access  to  the  networks  of  local  exchange  carriers;  "Federal  Universal  Service"  to  describe  line  items  seeking  to  recover  from  customers  carriers' 
 universal  service  contributions;  and  "Number  Portability"  to  describe  charges  relating  to  local  number  portability.  We  tentatively  conclude  that  such  labels  will  adequately  identify  the  charges 
 and  provide  consumers  with  a  basis  for  comparison  among  carriers,  while  at  the  same  time  be  sufficiently  succinct  such  that  most  carriers  will  be  able  to  use  them  without  requiring  that  they 
 modify  the  field  lengths  of  their  current  billing  systems.  We  seek  comment  on  these  tentative  conclusions.  In  addition,  we  seek  comment  on  alternative  labels,  or  appropriate  abbreviations 
 for  the  labeling  of  these  charges.  For  example,  the  Florida  Commission  suggests  the  terms  "Federal  Long  Distance  Access  Fee,"  "FCC  Long  Distance  Access  Fee,"  or  "Interstate  Long 
 Distance  Access  Fee"  to  identify  access  charges,  and  "Federal  Universal  Service  Fee,"  "FCC  Universal  Service  Fee,"  or  "Interstate  Universal  Service  Fee"  for  universal  service  related 
 charges.  196  Commenters  should  explain  the  merit  and  basis  for  their  proposed  labels,  including,  for  example  whether  their  proposals  were  chosen  or  evaluated  by  consumer  focus  groups. 
 Indeed,  we  believe  that  consumer  groups,  with  input  from  industry,  can  contribute  greatly  to  our  consideration  of  the  appropriate  labels.  Finally,  we  seek  comment  on  how  carriers  should 
 identify  line  items  that  combine  two  or  all  of  these  charges  into  a  single  charge.  We  encourage  parties  to  attempt  to  reach  consensus  on  the  appropriate  labels. 


 VI.  PROCEDURAL  MATTERS 
 A.  Final  Regulatory  Flexibility  Analysis 
 73.  As  required  by  the  Regulatory  Flexibility  Act  (RFA),  197  an  Initial  Regulatory  Flexibility  Analysis  (IRFA)  was  incorporated  in  the  Notice  in  Truth-  in-  Billing  and  Billing 
 Format.  198  The  Commission  sought  written  public  comment  on  the  proposals  in  the  Notice,  including  comment  on  the  IRFA.  The  comments  received  are  discussed  below.  This  present 


 196  Florida  Commission  comments  at  8. 
 197  See  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  the  CWAAA  is  the  Small  Business  Regulatory  Enforcement  Fairness  Act  of  1996  (SBREFA). 


 198  Notice,  13  FCC  Rcd  at  18194. 
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 Final  Regulatory  Flexibility  Analysis  (FRFA)  conforms  to  the  RFA.  199 
 1.  Need  for  and  Objectives  of  this  Order  and  the  Rules  Adopted  Herein 
 74.  Section  258  of  the  Act  makes  it  unlawful  for  any  telecommunications  carrier  "to  submit  or  execute  a  change  in  a  subscriber's  selection  of  a  provider  of  telephone  exchange 
 service  or  telephone  toll  service  except  in  accordance  with  such  verificatioHprocedures  as  the  Commission  shall  prescribe."  200  Accordingly,  the  Commission  adopts  in  this  Order  principles  to 
 ensure  that  consumers  receive  thorough,  accurate,  and  understandable  bills  from  their  telecommunications  carriers.  First,  consumer  telephone  bills  must  be  clearly  organized,  clearly 
 identify  the  service  provider,  and  highlight  any  new  providers;  second,  bills  must  contain  full  and  non-  misleading  descriptions  of  charges  that  appear  therein;  and  third,  bills  must  contain 
 clear  and  conspicuous  disclosure  of  any  information  the  consumer  may  need  to  make  inquiries  about,  or  contest  charges,  on  the  bill.  Additionally,  the  Commission  adopts  minimal,  basic 
 guidelines  that  explicate  carriers'  obligations  pursuant  to  these  broad  principles.  These  principles  and  guidelines  are  designed  to  prevent  the  types  of  consumer  fraud  and  confusion 
 evidenced  in  the  tens  of  thousands  of  complaints  that  this  Commission,  and  state  commissions,  receive  each  year.  201  In  enacting  the  principles  and  guidelines  contained  in  this  Order,  our  goal 
 is  to  implement  the  provisions  of  sections  201(  b)  and  258  to  prevent  telecommunications  fraud,  as  well  as  to  encourage  full  and  fair  competition  among  telecommunications  carriers  in  the 
 marketplace. 
 2.  Summary  of  the  Significant  Issues  Raised  by  the  Public  Comments  in  Response  to  the  IRFA 


 75.  In  the  IRFA,  we  found  that  the  rules  we  proposed  to  adopt  in  this  proceeding  may  have  a  significant  impact  on  a  substantial  number  of  small  businesses  as  defined  by  5  U.  S.  C.   
 601(  3).  The  IRFA  solicited  comment  on  the  number  of  small  businesses  that  would  be  affected  by  the  proposed  regulations  and  on  alternatives  to  the  proposed  rules  that  would  minimize  the 
 impact  on  small  entities  consistent  with  the  objectives  of  this  proceeding. 
 76.  PCIA,  Liberty,  RTG  and  others  argue  that  the  cost  of  compliance  faced  by  smaller 


 199  See  5  U.  S.  C.    604. 
 200  47  U.  S.  C.    258.  Our  jurisdiction  to  enact  truth-  in-  billing  requirements  also  stems  from  section  201(  b)  of 
 the  Act.  See  supra  Section  II(  B)  (Legal  Authority). 
 201  State  commissions  and  the  FTC  also  have  received  thousands  of  complaints.  See,  e.  g.,  Kansas  Commission 
 comments  at  1;  FTC  comments  at  5.  See  also  NASUCA  reply  at  2  (complaints  received  by  FCC  represent  "tip  of  the  iceberg").  See  supra  Sections  I,  II(  A). 
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 carriers  would  be  particularly  burdensome.  202  PCIA  asserts  that  medium-  and  small-  sized  carriers  will  be  less  likely  to  have  billing  systems  in  place  that  "can  simply  be  'tweaked'  to 
 produce  the  required  modifications."  203  Indeed,  PCIA  states  that  smaller  carriers  may  be  forced  to  replace  their  entire  billing  systems  in  order  to  comply  with  the  format  and  content  mandates 
 proposed  in  the  NPRM.  204  RTG  agrees,  arguing  that  rural  carriers  are  particularly  sensitive  to  increased  regulatory  requirements  with  significant  costs.  205 


 77.  The  Office  of  Management  and  Budget  (OMB)  received  a  large  number  of  comments  in  response  to  the  NPRM.  206  The  commenters  generally  agree  that  new  charges  or 
 services  need  to  be  easily  identifiable  on  customer  bills;  that  definitions  of  services  and  other  terms  are  difficult  to  reach  and  could  be  counterproductive;  that  more  information,  including 
 point  of  contact  toll-  free  numbers  for  service  providers  or  billing  agents  needs  to  be  included  in  billing  materials;  that  materials  should  be  clear,  concise,  and  relatively  simple;  that  the 
 Commission  must  account  for  costs  of  any  changes  to  bills  that  will  be  passed  on  to  consumers  in  making  decisions;  that  CMRS  and  other  wireless  firms  that  provide  services  only  to 
 businesses  should  be  exempt  from  most  new  requirements  that  would  be  imposed  on  wireline  carriers;  that  every  effort  should  be  made  so  that  billing  standards  are  uniform  across  the  nation; 
 that  reseller  information  should  be  included;  and  that,  where  possible,  market-  based  solutions  should  be  adopted  unless  there  is  conclusory  evidence  that  the  Commission  must  enact 
 regulations  that  affect  billing  practices.  207  As  a  result,  OMB  recommends  that  we  not  impose  undue  burdens  on  wireless  providers  and  small  wireline  services,  and  urges  that  flexibility  be 
 given  to  small  companies  that  may  experience  significant  cost  and  managerial  issues  related  to  implementation  of  billing  requirements.  208  Moreover,  OMB  recommends  that  the  Commission 
 allow  companies  sufficient  time  to  address  their  necessary  Year  2000-  related  modifications  to  their  computer  systems  as  well  as  modifying  their  billing  systems  to  meet  any  new 
 requirements.  209  OMB  also  recommends  that  the  Commission  make  a  concerted  effort  to  work 
 202  PCIA  comments  at  9;  Liberty  comments  at  2-  3;  RTG  comments  at  6-  7;  RCA  comments  at  3-  5;  PMT 
 comments  at  3-  4. 
 203  PCIA  reply  at  9. 


 204  Id. 
 205  RTG  comments  at  6-  7. 
 206  OMB  Action  at  2. 
 207  Id. 
 208  Id. 
 209  Id. 
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 with  the  industry  to  establish  voluntary  guidelines  in  lieu  of  mandatory  requirements  that  restrict  the  ability  of  firms  to  tailor  their  billing  to  meet  the  needs  of  customers.  210 
 78.  We  have  considered  these  comments  and  believe  we  appropriately  balanced  the  concerns  of  carriers  that  detailed  rules  may  increase  their  costs  against  our  goal  of  protecting 
 consumers  against  fraud.  We  have  exempted  CMRS  carriers  from  certain  of  our  requirements  on  ground  that  the  requirements  may  be  inapplicable  or  unnecessary  in  the  CMRS  context.  211 
 Moreover,  we  consider  our  principles  and  guidelines  to  be  flexible  enough  that  carriers  will  be  able  to  comply  with  them  without  incurring  unnecessary  expense. 


 3.  Description  and  Estimates  of  the  Number  of  Small  Entities  to  Which  the  Rules  Adopted  in  the  Order  in  CC  Docket  No.  98-  170  May  Apply 
 79.  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  adopted  rules.  212  The  RFA 
 generally  defines  the  term  "small  entity"  as  having  the  same  meaning  as  the  terms  "small  business,"  "small  organization,"  and  "small  governmental  jurisdiction."  213  In  addition,  the  term 
 "small  business"  has  the  same  meaning  as  the  term  "small  business  concern"  under  the  Small  Business  Act.  214  A  small  business  concern  is  one  which:  (1)  is  independently  owned  and 
 operated;  (2)  is  not  dominant  in  its  field  of  operation;  and  (3)  satisfies  any  additional  criteria  established  by  the  Small  Business  Administration  (SBA).  215 


 80.  The  most  reliable  source  of  information  regarding  the  total  numbers  of  certain  common  carrier  and  related  providers  nationwide,  as  well  as  the  numbers  of  commercial  wireless 
 entities,  appears  to  be  data  the  Commission  publishes  annually  in  its  Telecommunications 


 210  Id. 
 211  See  infra  Sections  II(  A),  III(  A). 
 212  5  U.  S.  C.    603(  b)(  3). 
 213  Id.  at    601(  6). 
 214  5  U.  S.  C.    601(  3)  (incorporating  by  reference  the  definition  of  "small  business  concern"  in  15  U.  S.  C.    632). 
 Pursuant  to  the  RFA,  the  statutory  definition  of  a  small  business  applies  "unless  an  agency,  after  consultation  with  the  Office  of  Advocacy  of  the  Small  Business  Administration  and  after  opportunity  for  public  comment,  establishes  one  or 


 more  definitions  of  such  term  which  are  appropriate  to  the  activities  of  the  agency  and  publishes  such  definition(  s)  in  the  Federal  Register."  5  U.  S.  C.    601(  3). 


 215  Small  Business  Act,  15  U.  S.  C.    632  (1996). 
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 Industry  Revenue  report,  regarding  the  Telecommunications  Relay  Service  (TRS).  216  According  to  data  in  the  most  recent  report,  there  are  3,459  interstate  carriers.  217  These  carriers  include, 
 inter  alia,  local  exchange  carriers,  wireline  carriers  and  service  providers,  interexchange  carriers,  competitive  access  providers,  operator  service  providers,  pay  telephone  operators,  providers  of 
 telephone  toll  service,  providers  of  telephone  exchange  service,  and  resellers. 
 81.  The  SBA  has  defined  establishments  engaged  in  providing  "Radiotelephone  Communications"  and  "Telephone  Communications,  Except  Radiotelephone"  to  be  small 
 businesses  when  they  have  no  more  than  1,500  employees.  218  Below,  we  discuss  the  total  estimated  number  of  telephone  companies  falling  within  the  two  categories  and  the  number  of 
 small  businesses  in  each,  and  we  then  attempt  to  refine  further  those  estimates  to  correspond  with  the  categories  of  telephone  companies  that  are  commonly  used  under  our  rules. 


 82.  Although  some  affected  incumbent  LECs  may  have  1,500  or  fewer  employees,  we  do  not  believe  that  such  entities  should  be  considered  small  entities  within  the  meaning  of  the 
 RFA  because  they  are  either  dominant  in  their  field  of  operations  or  are  not  independently  owned  and  operated,  and  therefore  by  definition  not  "small  entities"  or  "small  business  concerns" 
 under  the  RFA.  Accordingly,  our  use  of  the  terms  "small  entities"  and  "small  businesses"  does  not  encompass  small  ILECs.  Out  of  an  abundance  of  caution,  however,  for  regulatory  flexibility 
 analysis  purposes,  we  will  separately  consider  small  ILECs  within  this  analysis  and  use  the  term  "small  ILECs"  to  refer  to  any  ILECs  that  arguably  might  be  defined  by  the  SBA  as  "small 
 business  concerns."  219 


 216  FCC,  Telecommunications  Industry  Revenue:  TRS  Fund  Worksheet  Data,  Figure  2  (Number  of  Carriers 
 Paying  Into  the  TRS  Fund  by  Type  of  Carrier)  (Nov.  1997)  (Telecommunications  Industry  Revenue).  We  believe  that  the  TRS  Fund  Worksheet  Data  is  the  most  reliable  source  of  information  for  our  purposes  because  carriers  file 


 the  TRS  worksheets  yearly  and  are  instructed  to  select  the  single  category  of  type  of  service  provision  that  best  describes  them.  Other  sources  of  carrier  data,  such  as  the  tariffs  on  file  with  the  Common  Carrier  Bureau,  may  not 
 reflect  the  same  figures  as  the  TRS  Fund  Worksheet  Data,  because  such  sources  are  not  updated  annually. 
 217  Id. 


 218  13  C.  F.  R.    121.201,  Standard  Industrial  Classification  (SIC)  codes  4812  and  4813.  See  also  Executive 
 Office  of  the  President,  Office  of  Management  and  Budget,  Standard  Industrial  Classification  Manual  (1987). 
 219  See  13  C.  F.  R.    121.201,  SIC  code  4813.  Since  the  time  of  the  Commission's  1996  decision, 
 Implementation  of  the  Local  Competition  Provisions  in  the  Telecommunications  Act  of  1996,  First  Report  and  Order,  11  FCC  Rcd  15499,  16144-  45  (1996),  61  FR  45476  (August  29,  1996),  the  Commission  has  consistently 


 addressed  in  its  regulatory  flexibility  analyses  the  impact  of  its  rules  on  such  ILECs. 
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 83.  Total  Number  of  Telephone  Companies  Affected.  The  U.  S.  Bureau  of  the  Census  ("  Census  Bureau")  reports  that,  at  the  end  of  1992,  there  were  3,497  firms  engaged  in 
 providing  telephone  services,  as  defined  therein,  for  at  least  one  year.  220  This  number  contains  a  variety  of  different  categories  of  carriers,  including  local  exchange  carriers,  interexchange 
 carriers,  competitive  access  providers,  cellular  carriers,  mobile  service  carriers,  operator  service  providers,  pay  telephone  operators,  personal  communications  services  providers,  covered 
 specialized  mobile  radio  providers,  and  resellers.  It  seems  certain  that  some  of  those  3,497  telephone  service  firms  may  not  qualify  as  small  entities  or  small  ILECs  because 
 they  are  not  "independently  owned  and  operated."  221  For  example,  a  PCS  provider  that  is  affiliated  with  an  interexchange  carrier  having  more  than  1,500  employees  would  not  meet  the 
 definition  of  a  small  business.  It  is  reasonable  to  conclude  that  fewer  than  3,497  telephone  service  firms  are  small  entity  telephone  service  firms  or  small  ILECs  that  may  be  affected  by  our 
 principles  and  guidelines. 
 84.  Wireline  Carriers  and  Service  Providers.  The  SBA  has  developed  a  definition  of  small  entities  for  telephone  communications  companies  except  radiotelephone  (wireless) 
 companies.  The  Census  Bureau  reports  that  there  were  2,321  such  telephone  companies  in  operation  for  at  least  one  year  at  the  end  of  1992.  222  According  to  the  SBA's  definition,  a  small 
 business  telephone  company  other  than  a  radiotelephone  company  is  one  employing  no  more  than  1,500  persons.  223  All  but  26  of  the  2,321  non-  radiotelephone  companies  listed  by  the 
 Census  Bureau  were  reported  to  have  fewer  than  1,000  employees.  Thus,  even  if  all  26  of  those  companies  had  more  than  1,500  employees,  there  would  still  be  2,295  non-  radiotelephone 
 companies  that  might  qualify  as  small  entities  or  small  ILECs.  We  do  not  have  data  specifying  the  number  of  these  carriers  that  are  not  independently  owned  and  operated,  and  thus  are  unable 
 at  this  time  to  estimate  with  greater  precision  the  number  of  wireline  carriers  and  service  providers  that  would  qualify  as  small  business  concerns  under  the  SBA's  definition. 
 Consequently,  we  estimate  that  fewer  than  2,295  small  telephone  communications  companies  other  than  radiotelephone  companies  are  small  entities  or  small  ILECs  that  may  be  affected  by 
 our  principles  and  guidelines. 
 85.  Local  Exchange  Carriers.  Neither  the  Commission  nor  the  SBA  has  developed  a  definition  for  small  providers  of  local  exchange  services  (LECs).  The  closest 


 220  U.  S.  Department  of  Commerce,  Bureau  of  the  Census,  1992  Census  of  Transportation,  Communications, 
 and  Utilities:  Establishment  and  Firm  Size,  at  Firm  Size  1-  123  (1995)  (1992  Census). 
 221  See  generally  15  U.  S.  C.    632(  a)(  1). 


 222  1992  Census,  supra,  at  Firm  Size  1-  123. 
 223  13  C.  F.  R.    121.201,  SIC  code  4813. 
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 applicable  definition  under  the  SBA  rules  is  for  telephone  communications  companies  other  than  radiotelephone  (wireless)  companies.  224  According  to  the  most  recent  Telecommunications 
 Industry  Revenue  data,  1,371  carriers  reported  that  they  were  engaged  in  the  provision  of  local  exchange  services.  225  We  do  not  have  data  specifying  the  number  of  these  carriers  that  are  either 
 dominant  in  their  field  of  operations,  are  not  independently  owned  and  operated,  or  have  more  than  1,500  employees,  and  thus  are  unable  at  this  time  to  estimate  with  greater  precision  the 
 number  of  LECs  that  would  qualify  as  small  business  concerns  under  the  SBA's  definition.  Consequently,  we  estimate  that  fewer  than  1,371  providers  of  local  exchange  service  are  small 
 entities  or  small  ILECs  that  may  be  affected  by  our  principles  and  guidelines. 
 86.  Interexchange  Carriers.  Neither  the  Commission  nor  the  SBA  has  developed  a  definition  of  small  entities  specifically  applicable  to  providers  of  interexchange  services  (IXCs). 
 The  closest  applicable  definition  under  the  SBA  rules  is  for  telephone  communications  companies  other  than  radiotelephone  (wireless)  companies.  226  According  to  the  most  recent 
 Telecommunications  Industry  Revenue  data,  143  carriers  reported  that  they  were  engaged  in  the  provision  of  interexchange  services.  227  We  do  not  have  data  specifying  the  number  of  these 
 carriers  that  are  not  independently  owned  and  operated  or  have  more  than  1,500  employees,  and  thus  are  unable  at  this  time  to  estimate  with  greater  precision  the  number  of  IXCs  that  would 
 qualify  as  small  business  concerns  under  the  SBA's  definition.  Consequently,  we  estimate  that  there  are  fewer  than  143  small  entity  IXCs  that  may  be  affected  by  our  principles  and  guidelines. 


 224  Id. 
 225  Telecommunications  Industry  Revenue,  Figure  2. 
 226  13  C.  F.  R.    121.201,  SIC  code  4813. 
 227  Telecommunications  Industry  Revenue,  Figure  2. 
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 87.  Competitive  Access  Providers.  Neither  the  Commission  nor  the  SBA  has  developed  a  definition  of  small  entities  specifically  applicable  to  competitive  access  services 
 providers  (CAPs).  The  closest  applicable  definition  under  the  SBA  rules  is  for  telephone  communications  companies  other  than  except  radiotelephone  (wireless)  companies.  228 
 According  to  the  most  recent  Telecommunications  Industry  Revenue  data,  109  carriers  reported  that  they  were  engaged  in  the  provision  of  competitive  access  services.  229  We  do  not  have  data 
 specifying  the  number  of  these  carriers  that  are  not  independently  owned  and  operated,  or  have  more  than  1,500  employees,  and  thus  are  unable  at  this  time  to  estimate  with  greater  precision 
 the  number  of  CAPs  that  would  qualify  as  small  business  concerns  under  the  SBA's  definition.  Consequently,  we  estimate  that  there  are  fewer  than  109  small  entity  CAPs  that  may  be  affected 
 by  our  principles  and  guidelines. 
 88.  Resellers  (including  debit  card  providers).  Neither  the  Commission  nor  the  SBA  has  developed  a  definition  of  small  entities  specifically  applicable  to  resellers.  The  closest 
 applicable  SBA  definition  for  a  reseller  is  a  telephone  communications  company  other  than  radiotelephone  (wireless)  companies.  230  According  to  the  most  recent  Telecommunications 
 Industry  Revenue  data,  339  reported  that  they  were  engaged  in  the  resale  of  telephone  service.  231  We  do  not  have  data  specifying  the  number  of  these  carriers  that  are  not  independently  owned 
 and  operated  or  have  more  than  1,500  employees,  and  thus  are  unable  at  this  time  to  estimate  with  greater  precision  the  number  of  resellers  that  would  qualify  as  small  business  concerns 
 under  the  SBA's  definition.  Consequently,  we  estimate  that  there  are  fewer  than  339  small  entity  resellers  that  may  be  affected  by  our  principles  and  guidelines. 


 89.  Rural  Radiotelephone  Service.  The  Commission  has  not  adopted  a  definition  of  small  entity  specific  to  the  Rural  Radiotelephone  Service.  232  A  significant  subset  of  the  Rural 
 Radiotelephone  Service  is  the  Basic  Exchange  Telephone  Radio  Systems  (BETRS).  233  We  will  use  the  SBA's  definition  applicable  to  radiotelephone  companies,  i.  e.,  an  entity  employing  no 
 more  than  1,500  persons.  234  There  are  approximately  1,000  licensees  in  the  Rural 
 228  13  C.  F.  R.    121.201,  SIC  code  4813. 
 229  Telecommunications  Industry  Revenue,  Figure  2. 
 230  13  C.  F.  R.    121.201,  SIC  code  4813. 
 231  Telecommunications  Industry  Revenue,  Figure  2. 
 232  The  service  is  defined  in  Section  22.99  of  the  Commission's  Rules,  47  C.  F.  R.    22.99. 
 233  BETRS  is  defined  in  Sections  22.757  and  22.759  of  the  Commission's  Rules,  47  C.  F.  R.    22.757,  22.759. 
 234  13  C.  F.  R.    121.201,  SIC  code  4812. 
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 Radiotelephone  Service,  and  we  estimate  that  almost  all  of  them  qualify  as  small  entities  under  the  SBA's  definition. 
 90.  International  Services.  The  Commission  has  not  developed  a  definition  of  small  entities  applicable  to  licensees  in  the  international  services.  Therefore,  the  applicable  definition 
 of  small  entity  is  generally  the  definition  under  the  SBA  rules  applicable  to  Communications  Services,  Not  Elsewhere  Classified  (NEC).  235  This  definition  provides  that  a  small  entity  is 
 expressed  as  one  with  $11.0  million  or  less  in  annual  receipts.  236  According  to  the  Census  Bureau,  there  were  a  total  of  848  communications  services  providers,  NEC,  in  operation  in  1992, 
 and  a  total  of  775  had  annual  receipts  of  less  than  $9,999  million.  237  The  Census  report  does  not  provide  more  precise  data. 


 91.  Telex.  Neither  the  Commission  nor  the  SBA  has  developed  a  definition  of  small  entities  specifically  applicable  to  telex.  The  most  reliable  source  of  information  regarding  the 
 number  of  telegraph  service  providers  of  which  we  are  aware  is  the  data  the  Commission  collects  in  connection  with  the  International  Telecommunications  Data.  According  to  our  most  recent 
 data,  5  facilities  based  and  2  resale  provider  reported  that  they  engaged  in  telex  service.  Consequently,  we  estimate  that  there  are  fewer  than  7  telex  providers  that  may  be  affected  by  our 
 principles  and  guidelines. 
 92.  Message  Telephone  Service.  Neither  the  Commission  nor  the  SBA  has  developed  a  definition  of  small  entities  specifically  applicable  to  message  telephone  service.  The 
 most  reliable  source  of  information  regarding  the  number  of  message  telephone  service  providers  of  which  we  are  aware  is  the  data  the  Commission  collects  in  connection  with  the  International 
 Telecommunications  Data.  According  to  our  most  recent  data,  1,092  carriers  reported  that  they  engaged  in  message  telephone  service.  238  Consequently,  we  estimate  that  there  are  fewer  than 
 1,092  message  telephone  service  providers  that  may  be  affected  by  our  principles  and  guidelines. 
 93.  Cellular  Licensees.  Neither  the  Commission  nor  the  SBA  has  developed  a  definition  of  small  entities  applicable  to  cellular  licensees.  Therefore,  the  applicable  definition 
 of  small  entity  is  the  definition  under  the  SBA  rules  applicable  to  radiotelephone  (wireless) 


 235  An  exception  is  the  Direct  Broadcast  Satellite  (DBS)  Service,  infra. 
 236  13  C.  F.  R.    120.121,  SIC  code  4899. 
 237  1992  Economic  Census  Industry  and  Enterprise  Receipts  Size  Report,  Table  2D,  SIC  code  4899  (U.  S.  Bureau 
 of  the  Census  data  under  contract  to  the  Office  of  Advocacy  of  the  U.  S.  Small  Business  Administration). 
 238  International  Telecommunications  Data,  All  Carriers:  International  Message  Telephone  Resale  Service  at 
 Tbl.  D1. 
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 companies.  This  provides  that  a  small  entity  is  a  radiotelephone  company  employing  no  more  than  1,500  persons.  239  According  to  the  Bureau  of  the  Census,  only  twelve  radiotelephone  firms 
 out  of  a  total  of  1,178  such  firms  which  operated  during  1992  had  1,000  or  more  employees.  240  Therefore,  even  if  all  twelve  of  these  firms  were  cellular  telephone  companies,  nearly  all  cellular 
 carriers  were  small  businesses  under  the  SBA's  definition.  In  addition,  we  note  that  there  are  1,758  cellular  licenses;  however,  a  cellular  licensee  may  own  several  licenses.  In  addition, 
 according  to  the  most  recent  Telecommunications  Industry  Revenue  data,  804  carriers  reported  that  they  were  engaged  in  the  provision  of  either  cellular  service  or  Personal  Communications 
 Service  (PCS)  services,  which  are  placed  together  in  the  data.  241  We  do  not  have  data  specifying  the  number  of  these  carriers  that  are  not  independently  owned  and  operated  or  have  more  than 
 1,500  employees,  and  thus  are  unable  at  this  time  to  estimate  with  greater  precision  the  number  of  cellular  service  carriers  that  would  qualify  as  small  business  concerns  under  the  SBA's 
 definition.  Consequently,  we  estimate  that  there  are  fewer  than  804  small  cellular  service  carriers  that  may  be  affected  by  the  proposed  rules,  if  adopted. 
 94.  220  Mhz  Radio  Services.  Because  the  Commission  has  not  yet  defined  a  small  business  with  respect  to  220  MHz  services,  we  will  utilize  the  SBA  definition  applicable  to 
 radiotelephone  companies,  i.  e.,  an  entity  employing  no  more  than  1,500  persons.  242  With  respect  to  220  MHz  services,  the  Commission  has  proposed  a  two-  tiered  definition  of  small  business  for 
 purposes  of  auctions:  (1)  for  Economic  Area  (EA)  licensees,  a  firm  with  average  annual  gross  revenues  of  not  more  than  $6  million  for  the  preceding  three  years  and  (2)  for  regional  and 
 nationwide  licensees,  a  firm  with  average  annual  gross  revenues  of  not  more  than  $15  million  for  the  preceding  three  years.  Given  that  nearly  all  radiotelephone  companies  under  the  SBA 
 definition  employ  no  more  than  1,500  employees  (as  noted  supra),  we  will  consider  the  approximately  1,500  incumbent  licensees  in  this  service  as  small  businesses  under  the  SBA 
 definition. 
 95.  Private  and  Common  Carrier  Paging.  The  Commission  has  proposed  a  two-tier  definition  of  small  businesses  in  the  context  of  auctioning  licenses  in  the  Common  Carrier 
 Paging  and  exclusive  Private  Carrier  Paging  services.  Under  the  proposal,  a  small  business  will  be  defined  as  either  (1)  an  entity  that,  together  with  its  affiliates  and  controlling  principals,  has 
 average  gross  revenues  for  the  three  preceding  years  of  not  more  than  $3  million,  or  (2)  an  entity  that,  together  with  affiliates  and  controlling  principals,  has  average  gross  revenues  for  the  three 
 preceding  calendar  years  of  not  more  than  $15  million.  Because  the  SBA  has  not  yet  approved 


 239  13  C.  F.  R.    121.201,  SIC  code  4812. 
 240  1992  Census,  Series  UC92-  S-  1,  at  Table  5,  SIC  code  4812. 
 241  Telecommunications  Industry  Revenue,  Figure  2. 
 242  13  C.  F.  R.    121.201,  SIC  code  4812. 
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 this  definition  for  paging  services,  we  will  utilize  the  SBA's  definition  applicable  to  radiotelephone  companies,  i.  e.,  an  entity  employing  no  more  than  1,500  persons.  243  At  present, 
 there  are  approximately  24,000  Private  Paging  licenses  and  74,000  Common  Carrier  Paging  licenses.  According  to  the  most  recent  Telecommunications  Industry  Revenue  data,  172  carriers 
 reported  that  they  were  engaged  in  the  provision  of  either  paging  or  "other  mobile"  services,  which  are  placed  together  in  the  data.  244  We  do  not  have  data  specifying  the  number  of  these 
 carriers  that  are  not  independently  owned  and  operated  or  have  more  than  1,500  employees,  and  thus  are  unable  at  this  time  to  estimate  with  greater  precision  the  number  of  paging  carriers  that 
 would  qualify  as  small  business  concerns  under  the  SBA's  definition.  Consequently,  we  estimate  that  there  are  fewer  than  172  small  paging  carriers  that  may  be  affected  by  the  proposed  rules,  if 
 adopted.  We  estimate  that  the  majority  of  private  and  common  carrier  paging  providers  would  qualify  as  small  entities  under  the  SBA  definition. 


 96.  Mobile  Service  Carriers.  Neither  the  Commission  nor  the  SBA  has  developed  a  definition  of  small  entities  specifically  applicable  to  mobile  service  carriers,  such  as  paging 
 companies.  As  noted  above  in  the  section  concerning  paging  service  carriers,  the  closest  applicable  definition  under  the  SBA  rules  is  that  for  radiotelephone  (wireless)  companies,  245  and 
 the  most  recent  Telecommunications  Industry  Revenue  data  shows  that  172  carriers  reported  that  they  were  engaged  in  the  provision  of  either  paging  or  "other  mobile"  services.  246  Consequently, 
 we  estimate  that  there  are  fewer  than  172  small  mobile  service  carriers  that  may  be  affected  by  the  proposed  rules,  if  adopted. 


 97.  Broadband  Personal  Communications  Service.  The  broadband  PCS  spectrum  is  divided  into  six  frequency  blocks  designated  A  through  F,  and  the  Commission  has  held 
 auctions  for  each  block.  The  Commission  defined  "small  entity''  for  Blocks  C  and  F  as  an  entity  that  has  average  gross  revenues  of  less  than  $40  million  in  the  three  previous  calendar  years.  247 
 For  Block  F,  an  additional  classification  for  "very  small  business"  was  added  and  is  defined  as  an  entity  that,  together  with  their  affiliates,  has  average  gross  revenues  of  not  more  than  $15  million 


 243  Id. 
 244  Telecommunications  Industry  Revenue,  Figure  2. 
 245  13  C.  F.  R.    121.201,  SIC  code  4812. 
 246  Telecommunications  Industry  Revenue,  Figure  2. 
 247  See  Amendment  of  Parts  20  and  24  of  the  Commission's  Rules  --  Broadband  PCS  Competitive  Bidding  and 
 the  Commercial  Mobile  Radio  Service  Spectrum  Cap,  Report  and  Order,  WT  Docket  No.  96-  59,  11  FCC  Rcd  7824,  7850-  52  (1996),  61  FR  33859  (July  1,  1996)  (Broadband  PCS  Competitive  Bidding  Order);  see  also  47  C.  F.  R.   


 24.720(  b). 
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 for  the  preceding  three  calendar  years.  248  These  regulations  defining  "small  entity''  in  the  context  of  broadband  PCS  auctions  have  been  approved  by  the  SBA.  249  No  small  businesses  within  the 
 SBA-  approved  definition  bid  successfully  for  licenses  in  Blocks  A  and  B.  There  were  90  winning  bidders  that  qualified  as  small  entities  in  the  Block  C  auctions.  A  total  of  93  small  and 
 very  small  business  bidders  won  approximately  40%  of  the  1,479  licenses  for  Blocks  D,  E,  and  F.  250  Based  on  this  information,  we  conclude  that  the  number  of  small  broadband  PCS  licensees 
 will  include  the  90  winning  C  Block  bidders  and  the  93  qualifying  bidders  in  the  D,  E,  and  F  blocks,  for  a  total  of  183  small  entity  PCS  providers  as  defined  by  the  SBA  and  the 
 Commission's  auction  rules. 
 98.  Narrowband  PCS.  The  Commission  has  auctioned  nationwide  and  regional  licenses  for  narrowband  PCS.  There  are  11  nationwide  and  30  regional  licensees  for  narrowband 
 PCS.  The  Commission  does  not  have  sufficient  information  to  determine  whether  any  of  these  licensees  are  small  businesses  within  the  SBA-  approved  definition  for  radiotelephone 
 companies.  At  present,  there  have  been  no  auctions  held  for  the  major  trading  area  (MTA)  and  basic  trading  area  (BTA)  narrowband  PCS  licenses.  The  Commission  anticipates  a  total  of  561 
 MTA  licenses  and  2,958  BTA  licenses  will  be  awarded  by  auction.  Such  auctions  have  not  yet  been  scheduled,  however.  Given  that  nearly  all  radiotelephone  companies  have  no  more  than 
 1,500  employees  and  that  no  reliable  estimate  of  the  number  of  prospective  MTA  and  BTA  narrowband  licensees  can  be  made,  we  assume,  for  purposes  of  this  IRFA,  that  all  of  the  licenses 
 will  be  awarded  to  small  entities,  as  that  term  is  defined  by  the  SBA. 
 99.  Specialized  Mobile  Radio  (SMR).  The  Commission  awards  bidding  credits  in  auctions  for  geographic  area  800  MHz  and  900  MHz  SMR  licenses  to  firms  that  had  revenues  of 
 no  more  than  $15  million  in  each  of  the  three  previous  calendar  years.  251  In  the  context  of  900  MHz  SMR,  this  regulation  defining  "small  entity"  has  been  approved  by  the  SBA;  approval 
 concerning  800  MHz  SMR  is  being  sought.  We  do  not  know  how  many  firms  provide  800  MHz  or  900  MHz  geographic  area  SMR  service  pursuant  to  extended  implementation  authorizations, 
 nor  how  many  of  these  providers  have  annual  revenues  of  no  more  than  $15  million.  One  firm  has  over  $15  million  in  revenues.  We  assume,  for  purposes  of  this  IRFA,  that  all  of  the 
 remaining  existing  extended  implementation  authorizations  are  held  by  small  entities,  as  that  term  is  defined  by  the  SBA. 


 248  See  Broadband  PCS  Competitive  Bidding  Order,  11  FCC  Rcd  at  7852. 
 249  See,  e.  g.,  Implementation  of  Section  309(  j)  of  the  Communications  Act  --  Competitive  Bidding,  PP  Docket 
 No.  93-  253,  Fifth  Report  and  Order,  9  FCC  Rcd  5532,  5581-  84  (1994). 
 250  FCC  News,  Broadband  PCS,  D,  E  and  F  Block  Auction  Closes,  No.  71744  (released  January  14,  1997). 


 251  See  47  C.  F.  R.    90.814(  b)(  1). 
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 100.  The  Commission  has  held  auctions  for  geographic  area  licenses  in  the  900  MHz  SMR  band,  and  recently  completed  an  auction  for  geographic  area  800  MHz  SMR  licenses. 
 There  were  60  winning  bidders  who  qualified  as  small  entities  in  the  900  MHz  auction.  In  the  recently  concluded  800  MHz  SMR  auction  there  were  524  licenses  awarded  to  winning  bidders, 
 of  which  38  were  won  by  small  or  very  small  entities. 
 101.  Cable  Service  Providers.  The  SBA  has  developed  a  definition  of  small  entities  for  cable  and  other  pay  television  services  that  includes  all  such  companies  generating  no  more 
 than  $11  million  in  revenue  annually.  252  This  definition  includes  cable  systems  operators,  closed  circuit  television  services,  direct  broadcast  satellite  services,  multipoint  distribution  systems, 
 satellite  master  antenna  systems,  and  subscription  television  services.  According  to  the  Census  Bureau,  there  were  1,758  total  cable  and  other  pay  television  services  and  1,423  had  less  than 
 $11  million  in  revenue.  We  note  that  cable  system  operators  are  included  in  our  analysis  due  to  their  ability  to  provide  telephony. 


 4.  Summary  of  Projected  Reporting,  Recordkeeping  and  other  Compliance  Requirements 
 102.  Our  binding  principles  require  that  all  telecommunications  carriers,  both  wireline  and  wireless,  ensure  (1)  that  consumer  telephone  bills  be  clearly  organized,  clearly  identify  the 
 service  provider,  and  highlight  any  new  providers;  (2)  that  bills  contain  full  and  non-  misleading  descriptions  of  charges  that  appear  therein;  and  (3)  that  bills  contain  clear  and  conspicuous 
 disclosure  of  any  information  the  consumer  may  need  to  make  inquiries  about,  or  contest  charges,  on  the  bill.  In  addition,  carriers  must  comply  with  the  Commission's  rules  found  in 
 Appendix  A. 
 5.  Steps  Taken  to  Minimize  the  Significant  Economic  Impact  of  This  Order  on  Small  Entities  and  Small  Incumbent  LECs,  Including  the  Significant  Alternatives 
 Considered 
 103.  In  this  Order,  we  decline  to  adopt  many  of  the  proposals  made  in  the  Notice  that  would  be  most  costly  for  subject  carriers  to  implement.  For  example,  we  decline  to  adopt  our 
 proposal  to  require  carriers  to  indicate  each  new  service  ordered  by  a  customer  each  month.  We  also  decline  to  require  that  carriers  provide  a  detailed  breakdown  of  their  costs  incurred  due  to 
 federal  regulatory  action,  and  instead  permit  carriers  to  use  their  discretion  to  describe  the  nature  and  purpose  of  these  charges  to  their  customers.  We  have  adopted  general  principles  rather  than 
 stringent  rules  governing  the  organization  of,  and  information  included  in,  customer  bills.  We 


 252  13  C.  F.  R.    121.201,  SIC  4841. 
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 also  exempt  CMRS  carriers  from  certain  of  our  requirements.  253  By  implementing  principles  through  broad  guidelines,  we  allow  carriers  considerable  discretion  to  satisfy  their  obligation  in  a 
 manner  that  best  suits  their  needs  and  those  of  their  customers,  thus  minimizing  the  economic  impact  on  small  carriers  to  the  greatest  possible  extent.  The  principles  adopted  here  are 
 common-  sense  requirements  that  make  good  business  sense,  and  we  believe  that  many,  if  not  most,  subject  carriers  already  conform  to  these  requirements.  Many  carriers  will  therefore  find 
 that  little  or  no  change  to  their  existing  billing  practices  will  be  needed. 
 104.  The  Commission  will  send  a  copy  of  the  Order,  including  this  FRFA,  in  a  report  to  be  sent  to  Congress  pursuant  to  the  Small  Business  Regulatory  Enforcement  Fairness  Act  of 
 1996.  254  In  addition,  the  Commission  will  send  a  copy  of  the  Order,  including  the  FRFA,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business  Administration.  A  copy  of  the  Order  and 
 FRFA  (or  summaries  thereof)  will  also  be  published  in  the  Federal  Register.  255 


 253  See  infra  Section  II(  A),  Section  III(  A). 
 254  See  5  U.  S.  C.    801(  a)(  1)(  A). 
 255  See  5  U.  S.  C.    604(  b). 


 B.  Final  Paperwork  Reduction  Act  of  1995  Analysis 
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 105.  The  decision  herein  has  been  analyzed  with  respect  to  the  Paperwork  Reduction  Act  of  1995,  Pub.  L.  104-  13,  and  the  Office  of  Management  and  Budget  (OMB)  has  approved 
 some  of  its  requirements  in  OMB  No.  3060-  0854.  Among  its  recommendations,  OMB  "strongly  encourage[  d]"  us  not  to  adopt  an  approach  that  imposes  undue  burden  on  wireless  carriers,  and 
 "urges  flexibility  be  given  to  small  companies  that  may  experience  significant  cost"  as  a  result  of  our  proposals.  256  In  this  Order,  we  have  exempted  CMRS  carriers  from  certain  of  the 
 requirements  we  adopt  to  promote  truth-  in-  billing.  257  Moreover,  we  have  established  general  principles  and  guidelines,  rather  than  rigid  formatting  rules,  which  provide  sufficient  flexibility 
 to  small  carriers  to  meet  these  requirements  without  incurring  undue  cost.  Some  of  the  proposals  have  been  modified  or  added,  however,  and  therefore  some  of  the  information  collection 
 requirements  in  this  item  are  contingent  upon  approval  by  the  OMB. 
 C.  Initial  Regulatory  Flexibility  Analysis  for  Policies  Proposed  in  the  Further  Notice 
 106.  As  required  by  the  RFA,  the  Commission  has  prepared  this  present  IRFA  of  the  possible,  significant,  economic  impact  on  small  entities  of  the  policies  and  rules  proposed  in  this 
 Further  Notice.  258  Written  public  comments  are  requested  on  this  IRFA.  Comments  must  be  identified  as  responses  to  the  IRFA  and  must  be  filed  by  the  deadlines  for  comments  on  the 
 Further  Notice  provided  below  in  section  IV(  E).  The  Commission  will  send  a  copy  of  this  Further  Notice,  including  this  IRFA,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business 
 Administration.  259  In  addition,  the  Further  Notice  and  IRFA  (or  summaries  thereof)  will  be  published  in  the  Federal  Register.  260 


 107.  Need  for,  and  Objectives  of,  the  Proposed  Rules.  This  Further  Notice  seeks  comment  on  a  specific  proposed  rule  concerning  labelling  of  charges  relating  to  federal 
 regulatory  action.  In  addition,  the  Further  Notice  seeks  comment  on  whether  certain  of  our  truth-  in-  billing  requirements  should  be  applicable  to  CMRS  carriers.  The  proposals  made  in  this 
 Further  Notice  are  necessary  to  ensure  that  consumers  receive  clear  and  accurate  telecommunications  bills. 


 108.  Legal  Basis.  The  proposed  action  is  authorized  under  Sections  4(  i)  and  4(  j),  201, 
 256  OMB  Action  at  2. 
 257  See  infra  Section  II(  A),  Section  III(  A). 
 258  See  supra  Section  III. 
 259  See  5  U.  S.  C.    603(  a). 
 260  See  id. 
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 208,  254  and  303(  r)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  154(  j),  201,  208,  254,  and  303(  r). 
 109.  Description  and  Estimate  of  the  Number  of  Small  Entities  to  Which  the  Proposed  Rules  Will  Apply.  For  purposes  of  this  Further  Notice,  the  Regulatory  Flexibility  Act  defines  a 
 "small  business"  to  be  the  same  as  a  "small  business  concern"  under  the  Small  Business  Act  (SBA),  15  U.  S.  C.    632,  unless  the  Commission  has  developed  one  or  more  definitions  that  are 
 appropriate  to  its  activities.  Under  the  SBA,  "small  business  concern"  is  one  that:  (1)  is  independently  owned  and  operated;  (2)  is  not  dominant  in  its  field  of  operation;  and  (3)  meets 
 any  additional  criteria  established  by  the  SBA.  In  the  FRFA  pertaining  to  this  action,  we  described  in  detail  the  small  entities  potentially  subject  to  the  rules  adopted  in  this  Order.  These 
 same  entities  possibly  would  by  affected  by  the  proposal  made  in  this  Further  Notices.  For  purposes  of  this  IRFA,  therefore,  we  incorporate  the  list  of  potentially  affected  entities  contained 
 in  section  IV(  A)(  3). 
 110.  Description  of  Projected  Reporting,  Recordkeeping  and  Other  Compliance  Requirements.  We  seek  comment  on  a  proposal  designed  to  increase  the  accuracy  and 
 understandability  of  telephone  bills  to  consumers.  Comment  is  requested  on  a  proposal  to  require  uniform  labels  on  line-  item  charges  resulting  from  federal  regulatory  action. 


 111.  Federal  Rules  that  may  Duplicate,  Overlap,  or  Conflict  with  the  Proposed  Rule.  None. 
 112.  Any  significant  alternatives  minimizing  impact  on  small  entities  and  are  consistent  with  stated  objectives.  None. 
 D.  Initial  Paperwork  Reduction  Act  of  1995  Analysis  for  the  Further  Notice 
 113.  The  Further  Notice  portion  of  this  Order  contains  either  a  proposed  or  modified  information  collection.  As  part  of  its  continuing  effort  to  reduce  paperwork  burdens,  we  invite 
 the  general  public  and  the  Office  of  Management  and  Budget  (OMB)  to  comment  on  the  information  collections  contained  in  the  Further  Notice  of  Proposed  Rulemaking  portion  of  this 
 Order,  as  required  by  the  Paperwork  Reduction  Act  of  1995,  Pub.  L.  No.  104-  13.  Public  and  agency  comments  are  due  at  the  same  time  as  other  comments  on  the  Further  Notice  of  Proposed 
 Rulemaking;  OMB  comments  are  due  60  days  from  date  of  publication  of  this  Order  in  the  Federal  Register.  Comments  should  address:  (a)  whether  the  proposed  collection  of  information 
 is  necessary  for  the  proper  performance  of  the  functions  of  the  Commission,  including  whether  the  information  shall  have  practical  utility;  (b)  the  accuracy  of  the  Commission's  burden 
 estimates;  (c)  ways  to  enhance  the  quality,  utility,  and  clarity  of  the  information  collected;  and  (d)  ways  to  minimize  the  burden  of  the  collection  of  information  on  the  respondents,  including 
 the  use  of  automated  collection  techniques  or  other  forms  of  information  technology. 
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 E.  Comment  Filing  Procedure 
 114.  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  concerning  the  standardized  labels  for 
 charges  relating  to  federal  regulatory  action  no  later  than  14  days  after  publication  of  this  Further  Notice  in  the  Federal  Register.  Parties  shall  file  comments  concerning  application  of  the 
 truth-  in-  billing  principles  and  guidelines  to  CMRS  carriers  no  later  than  30  days  after  publication  of  the  Further  Notice  in  the  Federal  Register.  Parties  may  file  reply  comments  no  later  than  21 
 days  after  publication  of  the  Further  Notice  in  the  Federal  Register  concerning  charges  relating  to  federal  regulatory  action,  and  no  later  than  45  days  after  Federal  Register  publication 
 concerning  the  CMRS  issues  raised  in  the  Further  Notice.  Comments  will  be  limited  to  15  pages,  not  including  appendices.  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.  24,121  (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,  Postal  Service  mailing  address,  and  the  applicable 
 docket  or  rulemaking  number.  Parties  may  also  submit  an  electronic  comment  by  Internet  e-mail.  To  get  filing  instructions  for  e-  mail  comments,  commenters  should  send  an  e-  mail  to 
 ecfs@  fcc.  gov,  and  should  include  the  following  words  in  the  body  of  the  message,  "get  form  <your  e-  mail  address."  A  sample  form  and  directions  will  be  sent  in  reply. 


 116.  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.  All  filings  must  be  sent  to  the  Commission's  Secretary,  Magalie  Roman  Salas,  Office  of  the 
 Secretary,  Federal  Communications  Commission,  The  Portals,  445  Twelfth  Street,  S.  W.,  Washington,  D.  C.  20554. 


 117.  Parties  who  choose  to  file  by  paper  should  also  submit  their  comments  on  diskette.  These  diskettes  should  be  submitted  to  David  Konuch  of  the  Common  Carrier  Bureau's 
 Enforcement  Division,  The  Portals,  445  Twelfth  Street,  S.  W.,  Washington,  D.  C.  20554.  Such  a  submission  should  be  on  a  3.5  inch  diskette  formatted  in  an  IBM  compatible  format  using 
 WordPerfect  5.1  for  Windows  or  compatible  software.  Spreadsheets  should  be  saved  in  an  Excel  4.0  format.  The  diskette  should  be  accompanied  by  a  cover  letter  and  should  be  submitted  in 
 "read  only"  mode.  The  diskette  should  be  clearly  labelled  with  the  commenter's  name, 
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 proceeding  (including  the  docket  number  in  this  case  [CC  Docket  No.  98-  170]),  date  of  submission,  and  the  name  of  the  electronic  file  on  the  diskette.  The  label  should  also  include  the 
 following  phrase  "Disk  Copy  -  Not  an  Original."  Each  diskette  should  contain  only  one  party's  pleadings,  preferably  in  a  single  electronic  file.  In  addition,  commenters  must  send  diskette 
 copies  to  the  Commission's  copy  contractor,  International  Transcription  Service,  Inc.,  The  Portals,  Rm.  CY-  B400,  445  Twelfth  Street,  S.  W.,  Washington,  D.  C.  20554. 


 F.  Further  Information 
 118.  For  further  information  concerning  this  proceeding,  contact  David  Konuch,  Enforcement  Division,  Common  Carrier  Bureau  at  (202)  418-  0199  (voice),  (202)  418-  0485 
 (TTY). 
 119.  Alternate  formats  (computer  diskette,  large  print,  audio  cassette  and  Braille)  are  available  to  persons  with  disabilities  by  contacting  Martha  Contee  at  (202)  418-  0260  (voice), 
 (202)  418-  2555  (TTY),  or  at  mcontee@  fcc.  gov.  The  First  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking  can  be  downloaded  in  WP  or  ASCII  text  at:  http//  www.  fcc.  gov/  dtf/. 


 V.  ORDERING  CLAUSES 
 120.  Accordingly,  IT  IS  ORDERED,  pursuant  to  Sections  1,  4(  i)  and  (j),  201-  209,  254,  258,  and  403  of  the  Communications  Act,  as  amended,  47  U.  S.  C.    151,  154(  i),  154(  j), 
 201-  209,  254,  258,  and  403  that  this  First  Report  and  Order  IS  HEREBY  ADOPTED,  effective  30  days  after  publication  of  a  summary  in  the  Federal  Register.  The  collections  of  information 
 contained  within  are  contingent  upon  approval  by  the  Office  of  Management  and  Budget. 
 121.  IT  IS  FURTHER  ORDERED  that  Part  64  of  the  commission's  rules,  47  C.  F.  R.    64,  IS  AMENDED  as  set  forth  in  Appendix  B  hereto. 


 122.  IT  IS  FURTHER  ORDERED,  pursuant  to  Sections  1,  4(  i)  and  (j),  201-  209,  254,  and  403  of  the  Communications  Act,  as  amended,  47  U.  S.  C.    151,  154(  i),  154(  j),  201-  209, 
 254,  and  403,  that  this  Further  Notice  of  Proposed  Rulemaking  IS  HEREBY  ADOPTED  and  comments  ARE  REQUESTED  as  described  above. 


 123.  IT  IS  FURTHER  ORDERED  that,  to  the  extent  issues  from  CC  Docket  No.  97-  181,  Defining  Primary  Lines,  are  resolved  here,  we  incorporate  the  relevant  portions  of  the 
 record  in  that  docket. 
 124.  IT  IS  FURTHER  ORDERED  that  the  Commission's  Office  of  Public  Affairs,  Reference  Operations  Division,  SHALL  SEND  a  copy  of  this  First  Report  and  Order  and  Further 
 Notice  of  Proposed  Rulemaking,  including  the  Final  Regulatory  Flexibility  Analysis  and  the 
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 Initial  Regulatory  Flexibility  Analysis,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business  Administration. 
 FEDERAL  COMMUNICATIONS  COMMISSION 


 Magalie  Roman  Salas  Secretary 
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 APPENDIX  A  -  Final  Rules 
 1.  Part  64  of  Title  47  of  the  Code  of  Federal  Regulations  (C.  F.  R.)  is  amended  as  follows: 
 Subpart  Y  --  Truth-  in-  Billing  Requirements  for  Common  Carriers 
 64.2400  Purpose  and  scope 
 (a)  The  purpose  of  these  rules  is  to  reduce  slamming  and  other  telecommunications  fraud  by  setting  standards  for  bills  for  telecommunications  service.  These  rules  are  also  intended 
 to  aid  customers  in  understanding  their  telecommunications  bills,  and  to  provide  them  with  the  tools  they  need  to  make  informed  choices  in  the  market  for  telecommunications  service. 


 (b)  These  rules  shall  apply  to  all  telecommunications  common  carriers,  except  that  rules  64.2401(  a)(  2),  64.2401(  b),  and  64.2401(  c)  shall  not  apply  to  providers  of  Commercial 
 Mobile  Radio  Service  as  defined  in  section  20.9  of  the  Commission's  rules,  or  to  other  providers  of  mobile  service  as  defined  in  section  20.7  of  the  Commission's  rules,  unless  the  Commission 
 determines  otherwise  in  a  further  rulemaking. 
 (c)  Preemptive  effect  of  rules.  The  requirements  contained  in  this  subpart  are  not  intended  to  preempt  the  adoption  or  enforcement  of  consistent  truth-  in-  billing  requirements  by 
 the  states. 
 64.2401  Truth-  in-  Billing  Requirements 
 (a)  Bill  organization.  Telephone  bills  shall  be  clearly  organized,  and  must  comply  with  the  following  requirements: 


 (1)  the  name  of  the  service  provider  associated  with  each  charge  must  be  clearly  identified  on  the  telephone  bill. 
 (2)  where  charges  for  two  or  more  carriers  appear  on  the  same  telephone  bill,  the  charges  must  be  separated  by  service  provider,  and  the  telephone  bill  must 
 provide  clear  and  conspicuous  notification  of  any  change  in  service  provider,  including  notification  to  the  customer  that  a  new  provider  has 
 begun  providing  service.  (i)"  Clear  and  conspicuous  notification"  means  notice  that  would  be  apparent  to  a 
 reasonable  consumer.  (ii)"  New  service  provider"  is  any  provider  that  did  not  bill  for  services  on  the  previous 
 billing  statement.  The  notification  should  describe  the  nature  of  the  relationship  with  the  customer,  including  a  description  of 
 whether  the  new  service  provider  is  the  presubscribed  local 
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 exchange  or  interexchange  carrier. 
 (b)  Descriptions  of  billed  charges.  Charges  contained  on  telephone  bills  must  be  accompanied  by  a  brief,  clear,  non-  misleading,  plain  language  description  of  the  service  or 
 services  rendered.  The  description  must  be  sufficiently  clear  in  presentation  and  specific  enough  in  content  so  that  customers  can  accurately  assess  that  the  services  for  which  they  are  billed 
 correspond  to  those  that  they  have  requested  and  received,  and  that  the  costs  assessed  for  those  services  conform  to  their  understanding  of  the  price  charged. 


 (c)  "Deniable"  and  "Non-  Deniable"  Charges.  Where  a  bill  contains  charges  for  basic  local  service,  in  addition  to  other  charges,  the  bill  must  distinguish  between  charges  for  which 
 non-  payment  will  result  in  disconnection  of  basic,  local  service,  and  charges  for  which  non-payment  will  not  result  in  such  disconnection.  The  carrier  must  explain  this  distinction  to  the 
 customer,  and  must  clearly  and  conspicuously  identify  on  the  bill  those  charges  for  which  non-payment  will  not  result  in  disconnection  of  basic,  local  service.  Carriers  may  also  elect  to  devise 
 other  methods  of  informing  consumers  on  the  bill  that  they  may  contest  charges  prior  to  payment. 


 (d)  Clear  and  Conspicuous  Disclosure  of  Inquiry  Contacts.  Telephone  bills  must  contain  clear  and  conspicuous  disclosure  of  any  information  that  the  customer  may  need  to  make 
 inquiries  about,  or  contest  charges,  on  the  bill.  Common  carriers  must  prominently  display  on  each  bill  a  toll-  free  number  or  numbers  by  which  customers  may  inquire  or  dispute  any  charge 
 contained  on  the  bill.  A  carrier  may  list  a  toll-  free  number  for  a  billing  agent,  clearinghouse,  or  other  third  party,  provided  that  such  party  possesses  sufficient  information  to  answer  questions 
 concerning  the  customer's  account  and  is  fully  authorized  to  resolve  consumer  complaints  on  the  carrier's  behalf.  Each  carrier  must  make  its  business  address  available  upon  request  to 
 consumers  through  its  toll-  free  number. 
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 APPENDIX  B 
 PARTIES  FILING  COMMENTS  TO  THE  NOTICE  OF  PROPOSED  RULEMAKING  RESPONSIVE  PLEADINGS 
 CC  DOCKET  NO.  98-  170 
 Air  Touch  Communications  (Air  Touch)  America's  Carriers  Telecommunications  Association  (ACTA) 
 American  Association  of  Retired  Persons  (AARP)  American  Federation  of  Teachers  (AFT) 
 American  Public  Communications  Council  (APCC)  Americatel  Corporation  (Americatel) 
 Ameritech  Association  for  Local  Telecommunications  Services  (ALTS) 
 AT&  T  Bell  Atlantic 
 Bell  Atlantic  Mobile,  Inc.  (Bell  Atlantic  Mobile)  BellSouth  Corp.  (BellSouth) 
 Billing  Reform  Task  Force  (BRTF)  Bills  Project 
 Cable  and  Wireless  USA,  Inc.  (C&  W)  California  Public  Utilities  Commission  and  the  People  of  the  State  of  California  (California 
 Commission)  Cellular  Telecommunications  Industry  Association  (CTIA) 
 Century  Telephone  Enterprises,  Inc.  (Century)  Coalition  to  Ensure  Responsible  Billing  (Billing  Coalition) 
 CommNet  Cellular  Inc.  (CommNet)  Commonwealth  Telephone  Company  (Commonwealth) 
 Competitive  Telecommunication  Association  (CompTel)  DETECON,  Inc.  (Detecon) 
 Education  and  Library  Networks  Coalition  (ELNC)  Electronic  Commerce  Association  (ECA) 
 Irene  A.  Etzkorn  Excel  Communications,  Inc.  (Excel) 
 Federal  Trade  Commission  (FTC)  Florida  Public  Service  Commission  (Florida  Commission) 
 Frontier  Corp.  (Frontier)  Georgia  Consumers'  Utility  Counsel  Division  of  the  Governor's  Office  of  Consumer  Affairs 
 (Georgia)  Global  Telecompetition  Consultants,  Inc.  (GTC) 
 GST  Telecom  Inc.  (GST) 
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 GTE  Service  Corp.  (GTE)  GVNW  Inc./  Management  (GVNW) 
 Independent  Telephone  &  Telecommunications  Alliance  (ITTA)  Kansas  Corporation  Commission  (Kansas  Commission) 
 Liberty  Cellular,  Inc.  (Liberty)  Maine  Public  Utilities  Commission  (Maine  Commission) 
 MCI  Telecommunications  Corp.  (MCI)  Media  One  Group,  Inc.  (Media  One) 
 Minnesota  Office  of  Attorney  General  (Minnesota  OAG)  Mississippi  Public  Service  Commission  (Mississippi  Commission) 
 Missouri  Public  Utilities  Commission  (Missouri  Commission)  National  Association  of  Attorneys  General  (NAAG) 
 National  Association  of  Consumer  Agency  Administrators  (NACAA)  National  Association  of  State  Utility  Consumer  Advocates  (NASUCA) 
 National  Consumers  League  (NCL)  Nevadacom,  Inc.  (Nevadacom) 
 New  Networks  Institute  (NNI)  New  York  State  Consumer  Protection  Board  (NYCPB) 
 New  York  State  Department  of  Public  Service  (NYDPS)  Nextel  Communications,  Inc.  (Nextel) 
 Northwestern  Indiana  Telephone  Company,  Inc.  (NITCO)  Omnipoint  Communications,  Inc.  (Omnipoint) 
 Pennsylvania  Public  Utility  Commission  (Pennsylvania  Commission)  Personal  Communications  Industry  Association  (PCIA) 
 Petroleum  Communications,  Inc.  (Petroleum)  Pilgrim  Telephone,  Inc.  (Pilgrim) 
 Primeco  Personal  Communications,  L.  P.  (Primeco)  Project  Mutual  Telephone  Cooperative  Association  (PMT) 
 Public  Service  Commission  of  West  Virginia  (West  Virginia  Commission)  Public  Service  Commission  of  Wisconsin  (Wisconsin  Commission) 
 Public  Utilities  Commission  of  Ohio  (Ohio  Commission)  Public  Utility  Commission  of  Texas  (Texas  Commission) 
 Quality  Communications  Inc.  (QCI)  Qwest  Communications  Corporation  (Qwest) 
 Rural  Cellular  Association  (RCA)  Rural  Telecommunications  Group  (RTG) 
 Rural  Telephone  Coalition  (RTC)  SBC  Communications,  Inc.  (SBC) 
 Small  Business  Alliance  for  Fair  Utility  Regulation  (Small  Business)  Southern  Communications  Services,  Inc.  (SCS) 
 Sprint  Corporation  (Sprint) 
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 Telecommunications  Resellers  Association  (TRA)  Teligent,  Inc.  (Teligent) 
 Texas  Citizen's  Action  (TCA)  Texas  Office  of  Public  Utility  Counsel  (TOPC) 
 Time  Warner  Telecom,  Inc.  (Time  Warner)  United  States  Cellular  Corporation  (US  Cellular) 
 United  States  Telephone  Association  (USTA)  U  S  WEST  Communications,  Inc.  (U  S  WEST) 
 USP&  C  Utility  Consumers'  Action  Network  (UCAN) 
 Vermont  Public  Service  Board  and  Vermont  Department  of  Public  Service  (Vermont  Commission) 
 Washington  Utilities  &  Transportation  Commission  Staff  (Washington  Commission  Staff)  Wyoming  Public  Service  Commission  (Wyoming  Commission) 
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 PARTIES  FILING  REPLY  COMMENTS  TO  NOTICE  OF  PROPOSED  RULEMAKING  RESPONSIVE  PLEADINGS 
 CC  DOCKET  NO.  98-  170 


 American  Public  Communications  Council  (APCC)  Americatel  Corporation  (Americatel) 
 Ameritech  Asian  Pacific  Islander  American  Consumer  Coalition  (APIACC) 
 AT&  T  Bell  Atlantic  Mobile,  Inc.  (BAM) 
 BellSouth  Corporation  (BellSouth)  Billing  Reform  Task  Force  (BRTF) 
 Cellular  Telecommunications  Industry  Association  (CTIA)  Century  Telephone  Enterprises,  Inc.  (Century) 
 Coalition  to  Ensure  Responsible  Billing  (Billing  Coalition)  Comcast  Cellular  Communications,  Inc.  (Comcast) 
 Commonwealth  Telephone  Company  (Commonwealth)  GVNW  Inc./  Management  (GVNW) 
 MCI  Telecommunications  Corp.  (MCI)  National  Association  of  State  Utility  Consumer  Advocates  (NASUCA) 
 Nextel  Communications,  Inc.  (Nextel)  Paging  Network,  Inc.  (Paging  Network) 
 Personal  Communications  Industry  Association  (PCIA)  Pilgrim  Telephone,  Inc.  (Pilgrim) 
 PrimeCo  Personal  Communications,  L.  P.  (PrimeCo)  Rural  Utilities  Service  (RUS) 
 SBC  Communications,  Inc.  (SBC)  Sprint  Corporation  (Sprint) 
 Texas  Office  of  Public  Utility  Counsel  (TOPC)  United  States  Telephone  Association  (USTA) 
 U  S  WEST  Communications,  Inc.  (U  S  WEST) 
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 Separate  Statement  of 
 Commissioner  Susan  Ness 


 Re:  Truth-  in-  Billing  and  Billing  Format 
 Ignorance  is  not  bliss.  Confusing  or  misleading  bills  from  communications  carriers  are  not  good  for  consumers,  or  for  competition.  This  agency  does  have  a  role  to  play  in  making  sure 
 that  bills  are  fair,  reasonable,  and  intelligible. 
 When  we  initiated  this  proceeding  last  September,  I  expressed  my  hope  that  the  Notice  would  enable  us  to  work  with  carriers,  consumers,  and  other  governmental  entities  to  improve  the 
 billing  process.  I  have  been  encouraged  by  the  progress  that  has  resulted.  Many  in  industry  have  stepped  up  to  their  responsibility  to  improve  their  bills  to  make  them  more  intelligible, 
 more  consumer-  friendly.  Slamming  and  cramming  will  be  easier  to  detect,  and  therefore  will  be  less  likely  to  occur  in  the  first  place. 


 At  the  same  time,  the  rules  we  are  adopting  have  sufficient  flexibility  to  allow  for  individualized  experimentation  by  carriers.  As  new  services  and  bundles  are  brought  to  market,  we  need  not  -- 
 and  do  not  --  prevent  carriers  from  crafting  their  bills  in  creative  ways  that  meet  their  competitive  needs,  so  long  as  consumers'  fundamental  rights  are  protected. 


 I  remain  concerned  about  the  prospect  for  misleading  line  items.  Additional  changes  lie  ahead  in  universal  service  and  access  charges,  and  we  have  already  seen  how  some  carriers  have 
 exploited  the  occasion  of  change  to  confuse  consumers  and,  in  some  instances,  to  increase  aggregate  charges  even  as  aggregate  costs  are  declining.  Competition  should  go  a  long  way  to 
 ensuring  that  consumers  get  more,  and  pay  less.  But  continued  vigilance  on  billing  practices  will  be  essential  to  ensure  that  consumers  are  not  misled  or  mistreated. 


 Finally,  I  see  no  inherent  reason  why  wireless  carriers  should  not  be  subject  to  the  same  general  obligation  as  wireline  carriers  to  render  bills  that  are  fair,  clear,  and  truthful.  But  I  am 
 mindful  that  the  billing  practices  of  wireless  carriers  have  generated  only  an  incredibly  small  number  of  complaints.  Given  that  any  rules  --  even  flexible  ones  --  impose  some  costs  (which 
 ultimately  are  paid  by  consumers),  I  am  reluctant  to  establish  any  requirements  to  cure  a  non-existent  problem.  For  this  reason,  at  this  time,  I  am  inclined  to  forbear  from  applying  most  of  the 
 specific  rules  we  promulgate  today  to  wireless  carriers. 
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 SEPARATE  STATEMENT  OF  COMMISSIONER  MICHAEL  K.  POWELL,  CONCURRING 
 Re:  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  In  the  Matter  of  Truth-in-  Billing  and  Billing  Format  (CC  Docket  No.  98-  170). 
 When  we  initiated  this  proceeding  several  months  ago,  I  wrote  separately  to  express  my  firm  support  for  the  Commission  taking  steps  to  ensure  that  customers  have  accurate,  meaningful 
 information  in  a  format  they  can  understand.  I  underscored  that  the  proper  functioning  of  a  competitive  market  depends  on  consumers  having  such  information.  On  those  bases,  I  was 
 pleased  that  we  had  initiated  this  proceeding,  just  as  I  am  now  pleased  that  we  are  taking  additional  steps  in  this  Order  to  address  the  egregious  problems  of  slamming,  cramming  and 
 related  consumer  confusion.  I  also  support  our  decision  here  that,  to  the  extent  we  impose  requirements  in  this  area,  they  will  for  the  moment  be  broad  and  flexible  in  form,  so  as  to  allow 
 carriers  to  minimize  compliance  costs  and  to  differentiate  their  billing  practices  for  competitive  purposes. 


 As  a  devout  advocate  of  vigorous  enforcement,  I  am  convinced  that  the  government    whether  this  agency,  another  federal  agency  or  the  states    can  play  a  significant,  beneficial  role 
 in  protecting  consumers  from  demonstrable  harms  such  as  slamming,  even  in  the  context  of  competitive  telecommunications  markets.  Although  policymakers  may  disagree  about  the 
 extent,  form  or  timing  of  consumer  protection  efforts,  I  believe  it  is  entirely  appropriate  for  government  to  become  concerned  if  carriers  engage  in  abusive  practices,  particularly  where 
 competitive  choices  by  consumers  and  voluntary  actions  by  the  industry  cannot  effectively  stem  such  abuses. 


 Some  of  These  Requirements  Seem  Unnecessary  or  Ill-  Suited  to  Achieve  Their  Stated  Purposes 
 Regrettably,  however,  I  am  not  fully  convinced  of  the  necessity  or  value  of  some  of  the  rules  we  adopt  in  this  Order.  I  fail  to  understand,  for  example,  why  we  feel  the  need  to  require 
 carriers  to  put  their  names  on  bills  when  the  carrier  bills  directly  for  its  own  services,  a  practice  that  occurs  among  both  wireline  long  distance  companies  and  wireless  companies.  Is  there  any 
 factual  or  logical  reason  to  think  that  a  carrier  would  send  a  bill  to  a  consumer  without  indicating  whom  the  consumer  should  pay?  It  is  difficult  to  dispute  the  value  of  such  information,  but 
 equally  difficult  to  imagine  the  omission  of  such  information  in  a  commercial  enterprise,  absent  this  federal  requirement. 


 I  am  similarly  troubled  by  our  proposal  to  adopt  uniform  labels  for  line  items  that  carriers  include  on  their  bills  to  recover  their  federally-  mandated  payments,  such  as  access  charges  and 
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 contributions  to  universal  service.  In  contrast  to  the  celebrated  flexibility  of  most  of  the  requirements  adopted  in  this  Order,  the  Commission  proposes  to  require  that  specific  words  and 
 phrases  be  used  when  a  carrier  chooses  to  recover  its  government-  mandated  universal  service  and  other  charges  explicitly,  261  as  we  allow  them  to  do.  The  Order  offers  two  justifications  for 
 diverging  from  the  reasonable  flexibility  it  permits  with  respect  to  the  other  rules,  neither  of  which  seems  convincing.  First,  the  Order  states  that  the  line  item  labeling  proposal  will  enable 
 consumers  to  use  the  labels  to  comparison  shop  among  carriers,  so  as  to  obtain  the  best  deal  with  respect  to  the  recovery  of  those  federal  mandates.  262  Yet  our  rules  also  allow  carriers  to 
 recover  their  federal  charges  by  burying  the  amounts  passed  on  to  consumers  in  their  interstate  rates.  263  Thus,  even  if  we  adopt  uniform  labels  for  line  items,  consumers  will  remain  powerless 
 to  compare  the  manner  in  which  carriers  that  use  explicit  line  items  to  recover  their  federal  charges  against  carriers  that  essentially  hide  such  recovery  in  their  other  rates. 


 Second,  the  Order  states  that  the  line  item  labeling  proposal  will  prevent  such  labels  from  becoming  false  or  misleading.  Yet  I  fail  to  understand  why,  if  the  purpose  of  uniform  line  items 
 is  truly  to  avoid  false  or  misleading  characterizations  of  these  charges,  the  Commission  refuses  to  make  clear  that  carriers  may  indicate  that  their  own  contributions  to  universal  service  and 
 other  federal  requirements  are  mandatory,  and  that  the  Commission  allows  carriers  to  recover  the  amounts  associated  with  these  requirements  directly  from  consumers.  Although  some  may 
 prefer  that  carriers  simply  conceal  recovery  of  their  required  contributions  in  their  rates,  it  is  beyond  question  that  the  previous  Commission  expressly  allowed  carriers  to  do  so,  as  we 
 recently  acknowledged.  264  In  any  event,  I  remain  concerned  that  we  avoid  formalisms  and  semantic  hair-  splitting  regarding  the  extent  to  which  the  Commission  is  or  is  not  responsible  for 
 the  appearance  of  politically-  unpopular  line  items  on  consumers  bills.  Carriers  would  not  be  putting  these  line  items  on  their  bills  if  we  were  not  requiring  them  to  pay  the  underlying  charges 
 or  if  we  did  not  allow  carriers  to  recover  these  charges  from  end  users.  Thus,  try  as  we  might,  we  cannot  escape  the  fact  that  these  line  items  do  result,  at  bottom,  from  actions  taken  by  the 
 government  to  preserve  and  advance  universal  service,  and  to  achieve  other  valid  goals  pursuant  to  the  1996  Act. 


 261  Order  at    54. 
 262  Id. 
 263  See,  e.  g.,  Federal-  State  Joint  Board  on  Universal  Service,  CC  Docket  No.  96-  45,  Report  and  Order,  12 
 FCC  Rcd  8776,  9209,    851  (1997)  (Universal  Service  Order)). 


 264  Virginia  State  Corp.  Commn  v.  MCI  Telecommunications  Corp.,  1999  WL  152543,  FCC  99-  42,  File  No. 
 E-  99-  01  (rel.  Mar.  22,  1999),    19  (allowing  carrier  to  recover  universal  service  contributions  from  end  users  via  line  items  on  bills  because  [  t]  he  Universal  Service  Order  generally  permits,  but  does  not  require,  carriers  to 


 recover  the  cost  of  their  universal  service  contributions  from  their  customers  of  interstate  services)  (emphasis  added)  (citing  Universal  Service  Order,  12  FCC  Rcd  at  9209,    851). 
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 The  Order  Relies  on  Flawed  Premises  Regarding  the  Role  of  Competition  in  Consumer  Protection 
 But  the  strongest  of  my  misgivings  about  this  Order  centers  around  the  flawed  premises  justifying  our  imposition  of  these  requirements.  First,  these  premises  include  faulty,  poorly 
 supported  assertions  and  implicit  assumptions  that  competitive  markets  are  categorically  and  in  all  circumstances  unable  to  protect  consumers  from  the  types  of  harms  we  address  in  this 
 Order.  265  Second,  I  fear  that  these  underlying  premises,  when  juxtaposed  with  Congress  mandate  that  the  Commission  eliminate  and  forbear  from  unnecessary  regulation,  are  either 
 inconsistent  with  the  provisions  and  purposes  of  the  1996  Act  or  would  require  the  Commission  to  adopt  requirements  from  which  we  will  almost  immediately  forbear,  a  result  that  I  find 
 nonsensical. 
 Markets  and  Competitive  Choice  Provide  the  Most  Fundamental  Mechanisms  for  Protecting  Consumers 


 It  is  axiomatic  that  one  of  the  most  important  benefits  of  competition  is  that  it  gives  consumers  the  ability  to  change  providers  to  obtain  the  best  rates,  terms  and  conditions  for  their 
 individual  needs.  As  such,  competition  empowers  consumers  to  leave  their  provider  and  find  another  if  their  current  provider  does  not  treat  them  fairly.  Furthermore,  the  threat  of  consumer 
 churn  and  the  related  downward  pressure  on  profitability  266  provides  an  important  in  terrorem  effect  that  encourages  providers  to  do  everything  possible  to  avoid  losing  customers  to  the 
 competition,  including  avoiding  inaccuracies  and  misleading  information  in  their  bills.  Simply  put,  the  risk  to  providers  of  engaging  in  fraudulent  practices  in  a  competitive  market  is  that 
 consumers  will  soon  discover  these  practices  and  cease  to  generate  revenues  for  those  providers.  Of  course,  some  minority  of  providers  may  choose,  nonetheless,  to  misbehave  in  a  competitive 
 market  in  ways  that  are  not  easily  rectified  through  voluntary  actions  by  the  industry.  It  is  for 
 265  See,  e.  g.,  Order  at    7  (  Even  in  competitive  markets,  however,  disclosure  rules  are  needed  to  protect 
 consumers.)  (emphasis  added);  id.  at    7  n.  17  (  Because  mature  markets  also  require  disclosure  rules,  we  disagree  with  ALTS  argument  that  any  confusion  over  billing  formats  that  exists  today  is  merely  the  result  of  the  transition 


 to  fully  competitive  telecommunications  markets.).  The  erroneous  notion  that  competitive  markets  are  unable  to  protect  consumers  is  also  implicit  in  our  apparent  decision  to  seek  comment  on  whether  to  forbear  only  from  the 
 requirements  the  Order  declines  to  impose  on  CMRS  carriers,  rather  than  forbearing  from  all  of  these  truth  in  billing  requirements  with  respect  to  these  carriers.  Order  at    68  ([  W]  e  believe  that  all  consumers  expect  and 
 should  receive  bills  that  are  fair,  clear,  and  truthful.  However,  absent  evidence  that  there  is  a  problem  with  wireless  bills,  it  might  not  be  necessary  to  apply  the  remaining  rules  in  the  wireless  context.)  (emphasis  added). 
 266  See  generally  Frederick  F.  Reicheld  &  Thomas  A.  Teal,  The  Loyalty  Effect:  The  Hidden  Force  Behind 
 Growth,  Profits,  and  Lasting  Value  (Harvard  Business  School  Press)  (1996)  (documenting  quantitative  research  demonstrating  that  firms  that  retain  customers  dramatically  improve  their  profitability  by  improving  revenue 


 growth,  learning  and  productivity). 
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 this  reason  that,  even  in  a  competitive  market,  government  enforcement  may  be  necessary  to  stop  certain  companies  from  continuing  to  engage  in  harmful  practices. 
 Despite  these  truisms  of  competition,  the  Order  suggests  in  a  number  of  places  that  requirements  like  those  we  adopt  here  will  always  be  needed  in  every  market,  no  matter  how 
 competitive.  267  These  unsupported,  blanket  assertions  are  troubling  for  their  unstated,  paternalistic  judgment  that  consumers  are  ill-  suited  to  protect  themselves  even  when  they  are 
 empowered  to  escape  harm  by  choosing  a  new  provider.  Indeed,  these  assertions  ignore  the  likelihood  that  market  forces  may  generally  be  more  effective  in  eliminating  harms  to  consumers 
 than  government  intervention.  Recent  events  suggest  that  this  likelihood  is  indeed  real.  Several  major  carriers  (including  Ameritech,  Bell  Atlantic  and  Bell  South)  have  unveiled  or  will  soon 
 unveil  simplified  new  bills  that  will  help  them  to  retain  customers  and  respond  to  the  competitive  pressures  imposed  by  billing  innovations  introduced  by  new  entrants.  268  And  these  carriers  are 
 doing  so  for  the  most  part  without  government  mandate.  I  agree  that  we  should  celebrate  these  competitive  benefits  to  consumers  but,  in  the  parlance  of  this  item,  it  would  not  be  truthful  or 
 non-  misleading  to  suggest  that  these  actions  have  resulted  primarily  from  the  actions  of  regulators.  Rather,  market  forces  are  largely  responsible  for  the  improvements  we  are  seeing  and 
 will  continue  to  see. 
 Even  worse,  the  Orders  assertions  that  government  intervention  is  always  necessary  to  protect  consumers  ignore  the  clear  evidence  on  the  record  indicating  that  the  problems  of 
 slamming,  cramming  and  consumer  confusion  may  not  be  significant  in  certain  telecommunications  markets,  such  as  wireless,  and  among  certain  carriers,  such  as  those  that  bill 
 consumers  directly  only  for  their  own  services.  Although  complaints  on  these  issues  from  wireline  customers  number  in  the  tens  of  thousands  annually,  for  example,  complaints  from 
 wireless  customers  number  only  in  the  dozens    an  order  of  magnitude  fewer  even  if  one  controls  for  the  smaller  number  of  total  wireless  customers  relative  to  wireline  customers.  This 
 record  suggests  that  it  is  unnecessary  to  impose  these  requirements  on  some  carriers  in  order  to  ensure  that  consumers  have  access  to  useful  and  accurate  information. 


 267  See  supra  note  5. 
 268  See,  e.  g.,  Kathy  Chen,  Miracle  of  the  Bells:  the  Simplified  Phone  Bill,  Wall  St.  J.,  Apr.  12,  1999,  at  B1. 
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 The  Orders  Assertion  That  These  Requirements  Are  Necessary  in  All  Circumstances  is  Inconsistent  With  the  Acts  Mandate  That  the  Commission  Eliminate  and  Forbear  From 
 Unnecessary  Regulation 
 Given  the  record  evidence  that  market  or  other  factors  appear  to  be  sufficient  to  protect  consumers  in  some  instances,  the  big  question  that  remains  is:  whether  and  to  what  extent 
 companies  will  provide  useful  information  voluntarily  or  whether  government  intervention  will  become  necessary.  Unlike  some,  I  believe  that  Congress  has  already  answered  that  question  for 
 us.  Specifically,  Congress  has  commanded  that  we  look  in  the  first  instance  to  the  market  to  determine  what  carriers  provide  their  customers,  and  only  when  it  is  clearly  demonstrated  that 
 the  absence  of  regulation  will  harm  consumers  should  we  intervene. 
 The  statute  makes  clear  (through  mandatory  section  10  forbearance,  biennial  review,  and  the  pro-  competitive,  de-  regulatory  national  policy  framework  of  the  Act)  that  Congress  has 
 decided  that  markets  should  replace  regulation  except  where  actually  necessary  to  protect  consumers  or  to  maintain  just,  reasonable  and  nondiscriminatory  rates,  terms  and  conditions.  269 
 As  such,  I  feel  strongly  that  we  should  only  be  imposing  new  regulations    however  general  or  flexible    where  necessary  to  correct  well-  supported,  identifiable  harms  to  consumers  or  just 
 and  reasonableness  problems.  Thus,  I  can  support  the  application  of  these  new  requirements  on  certain  wireline  companies.  I  cannot,  however,  support  imposing  these  same  conditions  on 
 CMRS  providers.  Because  CMRS  carriers  are  excluded  from  equal  access  obligations,  CMRS  customers  are  less  likely  to  experience  slamming  with  respect  to  that  service.  270  Further,  CMRS 
 customers  also  are  unlikely  to  experience  cramming  with  respect  to  that  service,  because  CMRS  carriers  generally  only  bill  for  their  own  services,  thus  making  one  of  the  requirements  we  adopt 
 here  largely  inapplicable.  271  In  addition,  the  record  clearly  lacks  substantial  evidence  that  there 


 269  Congress  was  unmistakably  clear  in  its  judgment  that  the  Commission  must  rely  on  markets  and 
 competition,  rather  than  regulation,  to  oversee  the  development  of  communications  and  information  services  markets.  See  47  U.  S.  C.    160  ([  T]  he  Commission  shall  forbear  from  applying  any  regulation  or  any  provision  of 


 this  Act  .  .  .  if  the  Commission  determines  that  .  .  .  enforcement  of  such  regulation  or  provision  is  not  necessary  to  ensure  that  .  .  .  charges,  practices,  classifications,  or  regulations  .  .  .  are  just  and  reasonable  .  .  .  ;  enforcement  of 
 such  regulation  or  provision  is  not  necessary  for  the  protection  of  consumers;  and  forbearance  .  .  .  is  consistent  with  the  public  interest.)  (emphases  added);  47  U.  S.  C.    161  (requiring  the  Commission  to  review  all  regulations 
 every  two  years  to  determine  whether  any  such  regulation  is  no  longer  necessary  in  the  public  interest  as  the  result  of  meaningful  economic  competition  between  providers  of  such  service);  Joint  Managers  Statement,  S.  Conf.  No. 
 104-  230,  104  th  Cong.,  2d  Sess.  1  (1996)  (conference  report  indicating  that  purpose  of  1996  Act  is  to  provide  for  a  pro-  competitive,  de-  regulatory  national  policy  framework  designed  to  accelerate  rapidly  private  sector  deployment 
 of  advanced  telecommunications  and  information  technologies  and  services  by  opening  all  telecommunications  markets  to  competition  .  .  .)  (emphases  added). 


 270  Order  at    16. 
 271  See  cf.  Order,  Appendix  A,  47  C.  F.  R.    64.2001(  a)(  2)  (limiting  requirement  of  clear  and  conspicuous 
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 are  problems  that  need  correcting  in  the  CMRS  context,  as  the  Order  also  concedes.  Although  there  appears  to  be  some  lack  of  clarity  in  how  inquiries  by  CMRS  customers  are  categorized, 
 there  is  a  huge  magnitude  of  difference  in  the  number  of  slamming,  cramming  and  universal  service  complaints  for  wireless,  relative  to  wireline. 


 I  also  reject  any  notion  that  we  should  allow  enforcement  to  degenerate  into  imposing  broadly  rules  with  the  understanding  that  we  might  forbear  in  the  future.  If  the  Act  means 
 anything,  it  means  that  we  should  not  impose  regulations  just  for  the  sake  of  uniformity  or  to  enact  some  grand  regulatory  plan.  Sure,  we  could  impose  regulations  and  then  wait  for  parties  to 
 petition  for  forbearance,  but  why  impose  unneeded  rules  just  so  we  can  remove  them  later?  Notwithstanding  these  shortcomings,  I  applaud  the  majoritys  thoughtful  decision  not  to  impose 
 the  requirement  adopted  here  regarding  descriptions  of  billed  charges  on  CMRS  carriers.  272 
 Enforcement  and  Consumer  Protection  Should  Not  Provide  an  Excuse  for  Additional  Regulation 


 Since  taking  office,  I  have  spoken  often  about  the  importance,  in  promoting  competition  and  deregulation,  of  shifting  regulatory  resources  from  drafting  complex  prophylactic  rules  to 
 vigorous  enforcement.  The  term  enforcement,  like  competition  itself,  has  taken  a  prominent  place  in  telecom  regulatory  rhetoric;  no  one  would  be  caught  dead  saying  that  they  did  not 
 support  strong  enforcement.  Its  like  Mom  and  apple  pie. 
 But  we  should  be  careful  what  we  mean  by  enforcement.  To  be  consistent  with  the  Act,  enforcement  cannot  become  a  means  of  extending  regulation,  a  sort  of  full  employment 
 regulatory  approach  for  an  agency  concerned  about  making  sure  it  continues  to  play  an  active  role  as  we  transition  to  competitive  markets.  Rather,  enforcement  must  be  targeted  so  that 
 government  intervenes    only  when  and  only  to  the  extent    the  record  demonstrates  that  there  are  real,  identifiable  harms  that  the  market  participants  voluntary  actions  will  not  correct. 


 It  is  critical  to  the  process  of  regulators  ceding  control  to  the  market  that  enforcement  not  become  a  solution  in  search  of  a  problem  that  has  not  yet  been  identified.  Neither  should  we 
 suggest  that  we  do  not  need  a  problem  to  solve  in  order  to  justify  imposing  additional  regulatory  burdens  on  market  participants,  simply  because  we  believe  those  requirements  may  benefit 
 consumers.  If  such  an  unprincipled  approach  were  valid,  there  would  be  no  limit  to  the 


 notification  of  new  service  providers  to  situations  where  charges  for  two  or  more  carriers  appear  on  the  same  telephone  bill). 


 272  Order,  Appendix  A,  47  C.  F.  R.    64.2000(  b).  The  Order  also  declines  to  impose  the  requirements 
 pertaining  to  changes  in  service  providers,  as  well  as  to  deniable  and  non-  deniable  charges,  on  CMRS  carriers.  Id.  These  rules,  however,  would  be  largely  inapplicable  to  CMRS  carriers  anyway,  given  the  nature  of  the  charges 


 billed  and  the  fact  that  CMRS  carriers  generally  bill  directly  and  only  for  their  own  services. 
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 requirements  we  could  impose  on  carriers  in  the  name  of  consumer  protection.  Indeed,  the  sad  irony  of  imposing  such  unnecessary  requirements  is  that  doing  so  would  thwart  Congress 
 directive  that  we  use  competitive  markets  and  deregulation  to  benefit  consumers. 
 Having  expressed  these  reservations,  I  look  forward  to  working  with  my  colleagues  to  ensure  that  consumers  have  access  to  knowledge  that  will  truly  help  them  make  more  informed 
 buying  decisions. 
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 DISSENTING  STATEMENT  OF  COMMISSIONER  HAROLD  FURCHTGOTT-  ROTH 
 Re:  First  report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  Truth-  in-  Billing  and  Billing  Format;  (CC  Docket  98-  170). 
 I  dissent  from  the  adoption  of  this  item  and  write  separately  to  express  my  many  concerns  about  this  agency's  direct  involvement  in  commercial  billing  issues.  I  have  deep  reservations 
 about  the  extent  of  the  Commission's  authority  over  the  commercial  relationship  between  carriers  and  their  customers.  In  particular,  I  am  not  convinced  that  the  Commission  possesses  specific 
 statutory  authority  to  regulate  a  bill's  description  of  that  commercial  relationship,  or  even  the  truthfulness  of  that  communication.  Apart  from  the  question  of  statutory  authority,  I  also  view 
 this  exercise  as  an  unwise  use  of  limited  Commission  resources. 
 With  particular  respect  to  regulation  of  federal  charges,  I  noted  in  the  original  Notice  of  Proposed  Rulemaking  my  apprehension  that  carriers  might  be  pressured,  even  indirectly,  to 
 remove  or  alter  current  line  items  or  charges.  I  also  objected  to  any  suggestion  that  carriers  had  actually  misrepresented  any  facts  related  to  federal  charges.  Indeed,  as  I  have  stated  before, 
 while  the  government  does  not  require  a  particular  method  of  recovery,  it  has  mandated  payment  of  the  underlying  contributions  by  the  carriers.  273  Regrettably,  today's  Order  assumes  that  some 
 carriers  have  misrepresented  facts  on  bills  and  that  the  Commission  thus  must  take  prescriptive  action  to  address  those  misrepresentations.  I  disagree  with  the  premise  that  any  carrier  has  acted 
 to  mislead  its  consumers. 
 In  fact,  it  is  this  agency's  attempt  to  distance  itself  from  certain  federal  charges  that  qualifies  as  misleading.  Despite  its  best  efforts,  the  Commission  cannot  deny  that  the  underlying 
 charges  to  the  carriers  are  mandated  by  the  federal  government,  even  if  the  method  of  recovery  has  not  been  regulated.  A  "full  and  non-  misleading"  "Truth-  In-  Billing"  Order  would  recognize 
 the  rights  of  carriers  to  inform  their  customers  that  these  charges  are  indeed  federal  requirements  adopted  by  the  FCC,  and  that  the  Commission  expressly  allows  carriers  to  recover  these  charges 
 directly  from  consumers.  As  described  below,  it  is  this  Commission's  desire  to  hide  that  very  fact  from  consumers  that  has  precipitated  this  "Half-  Truth  in  Billing"  Order. 


 Regulation  of  descriptions  for  charges  when  there  is  nothing  factually  inaccurate  about  the  carriers'  statements  --  but  their  description  does  not  reflect  the  government's  preferred 
 explanation  of  the  charges  --  raises  grave  First  Amendment  questions.  This  Order's  attempt  to 
 273  "[  N]  o  carrier  should  have  its  billing  information  restricted  or  limited  by  the  Commission.  The  Commission 
 has  explicitly  provided  carriers  with  the  flexibility  to  decide  how  to  recover  their  payments,  including  as  charges  on  consumers  bills,  and  I  am  concerned  by  implications  that  such  charges  are  fraudulent  or  misrepresentations." 


 Dissenting  Statement  of  Commissioner  Harold  Furchtgott-  Roth  Regarding  the  Report  to  Congress  in  Response  to  Senate  Bill  1768  and  Conference  Report  on  H.  R.  3579,  rel.  May  8,  1998. 
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 regulate  speech  regarding  the  universal  service  charges  involves,  in  my  view,  censorship  of  speech  integrally  related  to  a  political  dispute  over  social  policy  and  taxation.  Given  the  lack  of 
 clear  statutory  authority  to  adopt  these  regulations,  the  prudent  course  would  have  been  to  avoid  --  and  not  to  create  --  these  constitutional  problems. 


 I.  The  Legal  Authority  for  These  Billing  Requirements  Is  Questionable,  And  The  Order's  Underlying  Assumptions  Contradict  The  Telecommunications  Act's  Deregulatory  Mandate. 
 I  have  serious  questions  about  the  extent  of  the  Commission's  legal  authority  to  regulate  the  commercial  relationship  between  carriers  and  their  customers,  as  well  as  the  wisdom  of  this 
 use  of  limited  Commission  resources.  The  majority  relies  in  part  on  its  authority  under  section  258  of  the  Act  to  adopt  verification  requirements  to  deter  slamming.  The  majority  contends  that 
 these  requirements  are  "intended  to  function  as  a  critical  component  of  the  Commission's  verification  procedures."  Supra  at  para.  23.  But  the  Commission  only  recently  adopted 
 verification  procedures,  along  with  liability  rules,  that  have  only  recently  started  to  take  effect.  274  Before  enacting  these  additional  burdens  on  carriers,  perhaps  the  Commission  should  have  tried 
 to  determine  the  adequacy  of  its  existing  verification  requirements. 
 Moreover,  as  the  majority  acknowledges,  the  Commission  has  even  less  statutory  authority  for  the  regulations  regarding  standardized  federal  labels  than  it  does  for  its  verification 
 rules.  Id.  at  para.  21  ("  We  recognize,  however,  that  the  standardized  label  guideline  rests  exclusively  on  our  statutory  authority  under  section  201(  b)  and  therefore  is  limited  to  interstate 
 services.")  Section  201(  b)  simply  provides:  "All  charges,  practices,  classifications,  and  regulations  for  and  in  connection  with  such  communication  service,  shall  be  just  and  reasonable  . 
 .  .  ."  The  majority  explains  that  the  "principles  and  guidelines  established  in  this  Order  are  intended  to  define  more  specifically  what  would  constitute  a  violation  of  section  201  in  the 
 billing  context  for  the  covered  carriers."  Supra  at  para.  24.  But  with  regard  to  the  various  federal  line  items,  it  is  not  clear  to  me  that  any  of  the  cited  line  items  or  their  corresponding 
 charges  are  either  unjust  or  unreasonable. 
 For  example,  the  majority  states  that  carriers  have  labelled  the  fee  related  to  universal  service  as  "Universal  Connectivity  Charge,"  "Federal  Universal  Service  Fee,"  "Carrier  Universal 
 Service  Charge,"  and  "Local  Service  Subsidy."  Id.  at  para.  51.  The  Commission  does  not  claim  that  any  of  these  labels  are  inherently  unjust  or  unreasonable;  indeed,  it  does  not  even  claim  that 
 any  of  the  labels  in  the  record  are  actually  misleading.  Neither  does  the  Commission  assert  that  the  corresponding  charges,  which  have  ranged  from  $.  93  per  bill  to  5%  of  the  customers  net 
 interstate  and  international  charges,  are  unjust  or  unreasonable.  Given  the  utter  failure  to  find  either  the  labels  or  the  charges  "unjust  or  unreasonable,"  it  is  difficult  to  see  how  the  regulations 
 concerning  standardized  labels  could  be  adopted  since  section  201(  b)  is  the  sole  source  of 


 274  See  1998  Slamming  Order  and  Further  Notice,  CC  Docket  No.  94-  129  (Rel  Dec.  23,  1998). 
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 authority  cited  by  the  Order. 
 In  addition,  I  disagree  with  the  premise  of  the  Order  that  "[  e]  ven  in  competitive  markets,  .  .  .  disclosure  rules  are  needed  to  protect  consumers."  Id.  at  para.  7;  see  also  id.  at  para.  6  ("[  A]  t 
 this  time,  competitive  pressures  alone  do  not  ensure  that  consumers  receive  clear,  informative  and  consumer-  friendly  telephone  bills  from  certain  carriers.").  I  do  not  believe  that  increased 
 competition  can  ever  be  the  impetus  for  further  regulatory  action  by  this  agency.  Indeed,  Congress  intended  just  the  opposite.  Both  the  Section  10  forbearance  requirements  and  the 
 Section  11  biennial  review  provisions  are  founded  on  the  assumption  that  as  competition  increases,  the  need  for  regulation  decreases.  275  Through  these  and  other  provisions  of  the  1996 
 Act,  Congress  made  clear  its  intention  that  the  Commission  remove  regulations  as  competition  develops.  We  are  not  supposed  to  increase  regulation  in  response  to  competition,  as  this  Order 
 does. 
 II.  This  "Truth-  in-  Billing"  Order  is  Internally  Inconsistent,  Arbitrary,  and  Misleading. 
 This  Order  is  riddled  with  internal  inconsistencies,  arbitrary  distinctions,  and  misleading  statements.  For  example,  I  am  still  confused  as  to  which  billing  requirements  apply  to  wireless 
 carriers  and  which  do  not.  These  requirements,  of  course,  are  not  a  small  matter.  The  Order  states  that  the  "broad  principles  that  we  adopt  to  promote  truth-  in-  billing  should  apply  to  all 
 telecommunications  carriers,  both  wireline  and  wireless."  Supra  at  para.  12  (emphasis  added).  The  majority  explains  that  these  "principles"  apply  to  all  carriers  because  they  "represent 
 fundamental  statements  of  fair  and  reasonable  practices."  Id.  The  majority  concludes  that  "[  l]  ike  wireline  carriers,  wireless  carriers  also  should  be  fair,  clear,  and  truthful  in  their  billing 
 practices.  Consumers  deserve  no  less."  Id.  Thus,  the  majority  concludes  that  these  principles  are  enforceable  as  just  and  reasonable  practices  under  section  201(  b).  Supra  at  para.  24  ("  The 
 principles  and  guidelines  established  in  this  Order  are  intended  to  define  more  specifically  what  would  constitute  a  violation  of  section  201(  b)  in  the  billing  context  for  the  covered  carriers.") 


 Comparison  of  the  principles  with  the  actual  rules  is  an  interesting  exercise.  The  Commission's  second  principle,  clearly  applicable  to  wireless  carriers,  requires  "that  bills  contain 
 full  and  non-  misleading  descriptions  of  charges  that  appear  therein."  Id.  at  para.  5.  The  rule  implementing  that  principle,  technically  applicable  only  to  wireline  carriers,  requires  that 
 "[  c]  harges  contained  on  telephone  bills  must  be  accompanied  by  a  brief,  clear,  non-  misleading,  plain  language  description  of  the  service  or  services  rendered."  The  principle  is,  of  course, 
 virtually  indistinguishable  from  the  rule;  it  is  hard  to  see  how  the  obligations  could  differ.  But,  wireless  carriers  are  expressly  exempted  from  the  rule.  See  id.  at  Appendix  A  ("[  R]  ule 


 275  For  a  fuller  discussion  of  my  view  on  some  of  these  requirements,  for  example,  see  my  Report  on 
 Implementation  of  Section  11  by  the  Federal  Communications  Commission  (Dec.  21,  1998),  which  can  be  found  on  the  FCC  WWW  site  at  <http://  www.  fcc.  gov/  commissioners/  furchtgott-  roth/  reports/  sect11.  html>. 
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 64.2001(  b)  .  .  .  shall  not  apply  to  providers  of  Commercial  Mobile  Radio  Service.").  Is  that  some  indication  these  obligations  should  not,  under  any  circumstances,  apply  to  wireless 
 providers?  These  conflicting  statements  make  it  unclear  whether  the  bills  of  wireless  providers  must  contain  full  and  non-  misleading  descriptions,  or  not.  While  full  and  non-  misleading 
 description  are  not  required  of  wireless  providers  under  the  rule  itself,  it  appears  that  wireless  carriers  would  be  in  violation  of  a  fundamental  fair  and  reasonable  practices  if  they  nonetheless 
 failed  to  provide  them.  But  if  the  descriptions  are  required  in  any  event,  why  has  the  Commission  bothered  to  exempt  wireless  carriers  from  the  implementing  regulation? 


 In  short,  when  one  compares  the  text  of  the  "principle"  with  the  text  of  the  "rule"  based  on  that  principle,  it  is  clear  that  they  are  almost  identical.  Yet,  the  majority  apparently  gives  this 
 distinction  some  meaning,  as  it  chooses  to  apply  the  principle  to  wireless  carriers  but  simultaneously  exempts  wireless  carriers  from  the  rule.  At  the  same  time,  the  majority  refuses  to 
 explain  exactly  what  effect,  if  any,  this  exemption  will  have.  Are  wireless  carriers  required  to  provide  full  and  non-  misleading  descriptions  of  charges  on  their  bills  or  not?  Can  a  consumer 
 file  a  complaint  against  a  wireless  carrier  for  failing  to  provide  such  a  description  or  not?  These  are  not  unreasonable  questions,  the  answers  to  which  should  be  readily  apparent  from  a  "clear 
 and  non-  misleading"  FCC  Order.  Wireless  carriers,  and  their  consumers,  are  entitled  to  know  what  requirements  are  being  placed  on  them  by  this  agency. 


 The  only  real  distinction  that  I  can  discern  between  the  principle  applicable  to  wireless  carriers  and  the  rule  that  exempts  them  is  a  practical  one  relating  to  the  proper  pleading  of  a 
 complaint  against  a  wireless  carrier.  A  consumer  who  objects  to  a  wireless  carrier's  failure  to  include  full  and  non-  misleading  descriptions  of  the  charges  on  his  bill  and  who  files  a  complaint 
 under  rule  64.2001(  b)  will  be  denied  relief.  The  same  complaint  filed  against  a  wireless  carrier  as  an  unreasonable  practice  pursuant  to  section  201(  b)  276  ,  however,  would  necessarily  succeed, 
 as  the  Commission  has  already  determined  that  including  full  and  non-  misleading  descriptions  of  the  charges  on  a  bill  is  "fundamental  to  a  carrier's  obligation  of  reasonable  charges  and 
 practices."  Supra  at  para.  37.  The  majority  goes  even  further  in  stating  that  "we  find  it  difficult  to  imagine  any  scenario  where  payment  could  be  lawfully  demanded  on  the  basis  of  inaccurate, 
 incomplete,  or  misleading  information."  Id. 
 Neither  does  this  essentially  ephemeral  distinction  between  principles  and  rules  alter  the  burden  of  proof.  The  majority  has  already  determined  that  its  billing  principles  are  based  on 
 fundamental  fairness  and,  as  such,  always  apply.  How  could  the  Commission  allow  wireless  carriers  to  fail  to  provide  fair  and  reasonable  practices?  Could  the  Commission  decide  that 
 wireless  consumers  "deserve  less"  than  "fundamental[  ly]  fair  and  reasonable  practices?"  I  doubt 


 276  The  majority  expressly  states  that  "such  [CMRS]  providers  remain  subject  to  the  reasonableness  and 
 nondiscrimination  requirements  of  section  201  and  202  of  the  Act,  and  our  decision  here  in  no  way  diminishes  such  obligations  as  they  may  relate  to  the  billing  practices  of  CMRS  carriers."  Supra  at  para.  19. 
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 it.  Would  a  defending  wireless  carrier  instead  need  to  demonstrate  that  the  provision  of  full  and  non-  misleading  descriptions  is  not  necessarily  a  fundamentally  fair  and  reasonable  practice?  If  a 
 carrier  could  ever  make  such  a  showing,  then  the  provision  of  "full  and  non-  misleading  descriptions"  would  not  always  be  necessary  to  maintain  fair  and  reasonable  practices.  But  the 
 majority's  very  justification  for  adopting  these  principles  is  that  they  are  "fundamental  principles  of  fairness  to  consumers  and  just  and  reasonable  practices  by  carriers."  Id.  at  para.  5.  Admitting 
 that  such  a  showing  could  be  made  would  thus  undermine  the  justifications  for  adopting  the  principles  in  the  first  place.  By  refusing  to  clarify  that  such  a  complaint  against  wireless  carriers 
 must  be  accepted  and  instead  maintaining  the  exemption  for  wireless  carriers,  the  Commission  signals  that  --  at  least  in  the  wireless  context  --  consumers  indeed  could  "deserve  less"  than  "fair, 
 clear,  and  truthful  .  .  .  billing  practices."  Id.  at  para.  12. 
 I  am  astonished  that  the  majority  would  go  to  such  extremes  to  exempt  an  industry  from  a  particular  rule,  while  still  requiring  compliance  with  an  identical  "principle"  as  a  reasonable 
 practice.  For  what  purpose  are  they  making  this  distinction?  The  problem  appears  to  be,  in  part,  the  result  of  the  Commission's  vague  use  of  the  word  "principles"  to  describe  specific 
 requirements.  Moreover,  these  "principles"  are  not  voluntary,  but  enforceable  as  fair  practices  under  section  201(  b).  Supra  at  n.  14.  For  all  practical  purposes,  then,  these  principles  are  rules 
 of  conduct,  and  materially  indistinguishable  from  the  actual  rules  adopted.  I  am  left  to  conclude  that  this  Order  is  more  than  just  confusing  due  to  its  internal 
 inconsistencies;  it  is  intentionally  "misleading,"  at  least  to  the  extent  that  it  implies  that  some  of  these  requirements  do  not  actually  apply  to  wireless  carriers.  Either  that,  or  it  has  simply  failed 
 to  be  "full  and  non-  misleading"  in  informing  wireless  consumers  that  their  rights  under  section  201(  b)  have  been  diminished  and  that  a  complaint  alleging  that  a  carrier  has  failed  to  conform  to 
 practices  that  the  Commission  has  declared  fundamentally  fair  may  be  denied  on  its  face.  Surely  consumers,  and  all  of  the  industries  to  which  these  regulations  apply,  deserve  more  than  the  "half 
 truths"  and  doublespeak  of  this  Order. 
 Similarly,  it  seems  arbitrary  for  the  majority  to  conclude  that  wireless  carriers  should  be  subject  to  one  of  the  rules  implementing  the  second  principle  --  namely,  that  the  requirement  of 
 standardized  labels  for  charges  resulting  from  federal  regulatory  action,  supra  at  para.  18  --  while  at  the  same  time  exempting  them  from  the  guideline/  rule  that  merely  repeats  the  general 
 principle.  Compare  id.  at  para.  18  with  Appendix  A.  If  the  general  "principle  of  full  and  non-misleading  descriptions  also  extends  to  carrier  charges  purportedly  associated  with  federal 
 regulatory  action,"  id.  at  para  49,  and  wireless  carriers  must  use  standardized  labels  in  the  interest  of  "full  and  non-  misleading  descriptions,"  then  how  can  the  Commission  simultaneously 
 exempt  wireless  carriers  from  rule  64.2001(  b)  's  implementing  requirement  that  bills  contain  "brief,  clear,  non-  misleading,  plain  language  descriptions"?  Should  not  a  carrier  be  subject  to  a 
 more  general  requirement  before  it  is  subject  to  a  specific  rule  implementing  the  requirement?  Again,  this  Order  is  at  best  "confusing"  and  at  worst  arbitrary  in  its  application  and  justification 
 of  its  regulatory  scheme. 
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 Finally,  I  believe  that  this  Order  is  "misleading"  --  and  certainly  not  "full  and  non-misleading"  --  in  refusing  to  recognize  the  rights  of  carriers  to  inform  their  customers  that  the 
 underlying  federal  charges  are  indeed  federal  requirements,  mandated  by  the  FCC.  The  Commission  expressly  allows  carriers  to  recover  the  amounts  associated  with  these  charges 
 directly  from  consumers.  Despite  its  claims  to  the  contrary,  the  charges  appearing  on  consumers'  bills  are  the  result  of  this  agency's  requirement  that  carriers  "contribute"  to  the  universal  service 
 fund  at  a  specified  level.  Recognizing  our  own  role  in  these  charges,  now  appearing  on  consumers'  bills,  would  be  the  truly  "non-  misleading"  approach. 


 In  sum,  I  can  only  conclude  that  the  Commission  has  been  arbitrary  either:  (i)  in  the  adoption  of  these  requirements,  since  it  refuses  to  apply  its  understanding  of  "fundamentally  fair 
 and  reasonable  practices"  across  the  board  to  all  carriers;  or  (ii)  in  the  application  of  its  rules  only  to  particular  carriers,  while  requiring  all  other  carriers  to  abide  by  identical  principles. 
 Either  way,  it  appears  that  the  Commission  has  acted  arbitrarily  and  capriciously  in  adopting  and  applying  these  binding  principles  and  rules.  Moreover,  this  Order  is  at  least  as  "misleading"  and 
 "confusing"  as  many  of  the  charges  and  practices  about  which  the  Commission  complains.  It  is  ironic  indeed,  that  this  agency's  "truth-  in-  billing"  initiative  could  not  even  pass  its  own  standard 
 for  "brief,  clear,  non-  misleading,  plain  language  description[  s]"  with  regard  to  the  regulations  that  it  imposes. 


 III.  The  History  of  the  Universal  Service  Program  and  "Truth-  In-  Billing" 
 What  disturbs  me  most  about  this  Order  are  the  Commission's  underlying  motives  for  regulating  carriers'  descriptions  of  federal  charges:  namely,  that  the  majority  does  not  want  to  be 
 associated  with  the  taxes  they  themselves  have  established,  and  that  they  are  angry  with  carriers  who  have  informed  consumers  about  the  tax  and  the  majority's  involvement  with  it.  As  one  high 
 ranking  Commission  official  warned  at  the  time  these  taxes  were  originally  imposed,  "Carriers  better  sharpen  their  pencils  and  think  twice  about  what  they're  putting  on  customers'  bills  and 
 attributing  to  government  action."  Some  MCI  Customers  Seeing  Surge  in  Phone  Bills,  Washington  Post,  January  31,  1998  at  page  H-  3. 


 This  story  begins  with  the  Commission's  development  of  the  schools  and  libraries  program.  In  a  May  1997  Order,  the  Commission  "requir[  ed]  phone  companies  [to]  make  .  .  .[  a 
 universal  service]  'contribution'  for  the  social  good  of  wiring  schools  and  libraries  to  the  internet.  .  .  .  [T]  he  companies  will  have  to  hand  over  $2.25  billion  in  extra  charges  for  the  wiring  cause." 
 New  Phone  Tax,  Wall  Street  Journal,  December  9,  1997. 
 In  December  of  1997,  I  first  noted  my  concern  that  the  Commission  was  pressuring 
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 carriers  not  to  place  line-  items  for  these  charges  on  their  consumers'  bills.  277  At  the  time,  it  was  widely  reported  that  the  "Commission  prefers  that  [universal  service  costs]  be  rolled  into 
 rates,"  278  and  that  the  FCC  was  irate  with  companies  that  planned  to  pass  this  tax  through  to  consumers: 


 The  FCC  is  angry  at  companies  that  plan  to  disclose  those  costs  to  customers  as  a  line  item  on  the  monthly  bill.  "They  don't  want  us  to  call  it  a  tax,"  [said  one  industry 
 representative].  "But  that's  what  it  is." 
 A  New  Tax  for  the  New  Year,  The  Washington  Post,  December  2,  1997. 
 I  objected  to  the  Commission's  efforts  to  hide  this  tax  from  consumers,  making  clear  that  "I  do  not  share  such  a  preference  or  endorse  such  efforts.  .  .  .  No  carrier  should  have  its  billing 
 information  restricted  or  limited  by  the  Commission."  279  Indeed,  I  believe  that  consumers  have  a  right  to  know  when  they  are  paying  federal  charges;  the  Commission  should  not  discourage 
 companies  from  placing  federal  universal  service  charges  on  their  bills.  Line  items  for  new  taxes  are  a  means  of  letting  customers  understand  why  rates  are  not  lower  than  they  would  have 
 been  absent  the  new  taxes.  These  line  items  are  not  a  means  of  promoting  "hidden  rate  increases,"  as  some  have  called  it.  To  the  contrary,  the  only  "hidden  rate  increases"  here  are 
 those  that  result  from  obscured  and  unexplained  taxes. 
 For  consumers,  the  issue  is  not  just  whether  prices  have  gone  up  or  down.  The  question  is  whether  prices  would  have  been  lower  without  the  new  tax.  Only  in  Washington  could  explicit 
 disclosure  of  this  new  tax  be  considered  deceptive.  Depriving  consumers  of  information  about  new  taxes  demoralizes  a  democratic  society. 


 Despite  the  benefits  of  fully  informing  consumers  about  government-  mandated  charges,  "[  t]  he  administration,  which  has  touted  the  [schools  and  libraries]  program  as  the  centerpiece  of 
 President  Clinton's  education  goals,  would  rather  that  customers  not  know."  Itemized  list  of  phone  fees  hotly  debated,  USA  Today  December  15,  1997  at  B-  12.  So,  it  was  reported,  "the 
 FCC  .  .  .  had  been  pushing  hard  to  get  major  long-  distance  carriers  to  agree  not  to  put  line-  item  charges  on  residential  phone  bills  at  least  until  July."  FCC  Postpones  Ruling  on  Internet 
 Connections,  Washington  Post,  December  13,  1997  at  F-  9.  These  efforts  were  designed  to  "mask  [the  tax]  for  a  while,  to  take  some  pressure  off  from  the  Hill."  Id.  For  the  first  few  months 
 of  the  program,  the  Commission  even  "decided  to  reduce  the  [initial  universal  service]  charges 


 277  In  the  Matter  of  Federal-  State  Joint  Board  on  Universal  Service,  Third  Order  on  Reconsideration,  CC 
 Docket  No.  96-  45,  12  FCC  Rcd.  22801,  22814  (1997)  (Dissenting  Statement  of  Commissioner  Furchtgott-  Roth).  278 
 Monday  December  8,  Communications  Daily.  279 
 In  the  Matter  of  Federal-  State  Joint  Board  on  Universal  Service,  Third  Order  on  Reconsideration,  CC  Docket  No.  96-  45,  12  FCC  Rcd.  22801,  22814  (1997)  (Dissenting  Statement  of  Commissioner  Furchtgott-  Roth). 
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 after  the  carriers  said  the  fee  could  lead  to  higher  rates  and  after  AT&  T  and  MCI  threatened  to  specify  the  charge  on  the  bills  they  send  to  customers."  Fund  to  Aid  Technology  in  Schools 
 Facing  Big  FCC  Cuts,  New  York  Times,  December  15,  1997  at  D-  1.  Apparently,  "the  agency  worried  that  if  millions  of  Americans  began  seeing  such  fees  on  their  bills,  popular  support  for 
 deregulating  the  telecommunications  industry  could  begin  to  erode."  Id.  At  this  point,  most  large  carriers  began  to  place  the  line  items  only  on  bills  for  commercial  customers,  declining  to 
 specify  the  charges  on  bills  for  residential  customers. 
 Last  spring,  the  general  issue  of  line  items  for  schools  and  libraries  "contributions"  arose  again  when  the  Commission  began  to  consider  raising  the  funding  level  for  the  schools  and 
 libraries  program.  By  then,  many  carriers  had  announced  that  they  would  recover  these  costs  through  separate  line  items  on  individual  consumers,  such  as  residential  customers.  Again,  these 
 announcements  angered  some  at  the  Commission.  See,  e.  g.,  Statement  of  Chairman  William  E.  Kennard  on  AT&  T  Long  Distance  Announcement,  May  28,  1998  ("  AT&  T's  announcement  is 
 premature,  unwarranted  and  inconsistent  with  their  own  public  proposals  to  the  FCC.  This  announcement  suggests  that  AT&  T  will  raise  rates  to  pay  for  universal  service.");  "AT&  T  adding 
 surcharges;  FCC  Furious,"  USA  Today,  May  29,  1998  at  2  ("  The  FCC  is  livid.").  280 
 Immediately  after  carriers  announced  their  intent  to  place  line  items  on  residential  bills,  the  Commission  announced  its  plan  to  initiate  the  instant  "truth-  in-  billing"  proceeding.  Schools, 
 Libraries,  Health  Care  Discounts  Program  Faces  More  Scrutiny,  Washington  Report,  June  15,  1998  (Commissioners  "said  they  plan  to  adopt  a  notice  of  proposed  rulemaking  to  help  clear  up 
 consumer  confusion  about  new  rates  and  fees  attributed  to  the  discount  programs"). 
 Even  worse,  in  the  view  of  some  at  the  Commission,  opponents  of  the  tax  were  blaming  not  just  the  Commission  for  the  imposition  new  consumer  charges,  but  also  the  current 
 Administration,  which  strongly  supported  the  schools  and  libraries  program.  As  one  news  magazine  reported: 


 [The  Vice  President's]  biggest  high-  tech  achievement  to  date  is  a  program  to  wire  every  classroom  and  library  in  the  country.  .  .  .  But  right  now  the  program  is  under 
 assault  from  congress  as  an  out  of  control  entitlement  engineered  by  an  out-  of-control  bureaucracy.  Which  does  not  do  much  for  Gore's  reputation  as  the 
 architect  of  reinventing  government.  Even  more  ominous  is  another  threat: 
 280  See  also  FCC  Caught  in  Middle  on  Rate  Rise,  June  11,  1998  at  C-  3  ("  The  FCC  had  hoped  that  long 
 distance  carriers  would  absorb  the  costs  of  the  program,  .  .  .  But  AT&  T  Corp.,  MCI  Communications  Corp.  and  other  carriers  plan  to  levy  new  charges,  .  .  .  ").  See  Generally,  Some  MCI  Customers  Seeing  Surge  in  Phone  Bills, 


 Washington  Post,  January  31,  1998  at  page  H-  3  ("  FCC  officials  are  upset  about  being  blamed  by  MCI  for  the  new  charges.  The  agency  maintains  that  the  universal  service  fees  are  technically  charged  to  local  phone  companies,  .  .  . 
 which  are  authorized  to  seek  compensation  from  long  distance  carriers.  It's  up  to  MCI  and  other  long-  distance  companies  to  decide  how  to  pay,  the  FCC  contends."). 
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 starting  this  summer  phone  companies  that  were  ordered  to  pay  for  the  program  are  threatening  to  add  a  new  charge  to  the  long  distance  bills  of  residential 
 consumers.  Critics  are  already  calling  it  the  Gore  Tax. 
 TIME,  Karen  Tumulty  &  John  Dickerson,  Gore's  Costly  High  Wire  Act,  at  52,  May,  25  1998.  281  Others  even  claimed  the  schools  and  libraries  program  had  been  initiated  in  order  to  enhance  the 
 chances  of  possible  presidential  candidates,  arguing  that  it  was 
 nothing  less  than  a  stealth  campaign  to  enhance  Gore's  presidential  prospects.  "This  was  not  to  be  a  political  cash-  grant  program  so  that  Al  Gore  can  run  for  President, 
 [one  Congressman]  complain[  ed]." 
 Id.  at  55. 
 Toward  the  end  of  1998,  an  investigation  by  the  United  States  House  of  Representatives  confirmed  the  Commission's  attempt  to  prevent  carriers  from  associating  the  federal  government 
 with  these  charges: 
 It  is  clear  that  the  FCC  pressured  and  threatened  long  distance  carriers  in  an  inappropriate  manner  from  taking  action  regarding  how  long  distance  carriers  would  recover 
 their  contributions  to  universal  service  from  their  telephone  subscribers.  The  FCC  was  apparently  motivated  to  exert  such  pressure  to  fulfill  the 
 Administration's  political  agenda  to  connect  every  classroom  in  the  United  States  to  the  Internet  by  the  Year  2000,  and  to  do  so  while  hiding  the  costs  of  their 
 agenda  from  the  American  public. 
 Hill  Report  Finds  FCC  Threats,  political  Acts  Against  AT&  T  and  MCI,  Communications  Daily,  November  30,  1998.  282 


 281  See  also,  id.  ("  The  blame  inevitably  finds  its  way  to  Gore,  whose  hands  many  see  in  virtually  everything 
 the  FCC  does.");  A  New  Tax  for  the  New  Year,  The  Washington  Post,  December  2,  1997,  ("  The  Internet  in-  the-schools  idea  was  hatched  by  Vice  President  Gore  and  his  friend  Reed  Hundt,  the  recently  departed  FCC  chairman. 


 They  consistently  tout  the  benefits  of  the  program,  but  not  its  costs.");  Senators  tell  FCC  "Gore  tax"  too  costly,  The  Washington  Times,  June  11,  1998  at  B-  9  ("  Lawmakers  said  the  FCC  overreached  its  mandate  by  setting  up  a  $2.25 
 billion  fund  to  wire  schools  and  libraries,  which  critics  have  dubbed  the  "Gore  tax"  because  of  Vice  President  Al  Gore's  vigorous  support  of  the  program.  The  issue  came  to  a  head  this  week  after  long-  distance  companies  said 
 they  would  start  adding  about  $1  a  month  to  consumers'  bills  to  fund  the  program.");  Phone  Wars  leave  FCC  in  a  Political  Combat  Zone,  The  New  York  Times,  August  13,  1998  at  D-  1  ("  When  a  dispute  arose  over  the 
 commission's  plan  to  raise  money  to  subsidize  internet  connections  for  schools  and  libraries,  the  fees  were  immediately  labeled  the  "Gore  tax"  on  Capital  Hill."). 
 282  Finally,  I  note  that  the  timing  of  this  Order  is  curious.  It  is  no  coincidence  that  the  majority  seeks  to 
 strengthen  its  ability  to  keep  these  taxes  at  arms-  length  at  the  same  time  that  the  Commissions  is  considering  raising  this  tax  by  an  additional  $1  billion.  See,  e.  g.,  FCC  Mulls  Boosting  Internet  Funding  for  Schools,  Libraries,  Wall  St. 
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 At  bottom,  I  fear  that  this  agency  has  only  decided  to  regulate  the  description  of  federal  charges  because  many  carriers  went  "against  the  FCC's  wishes  and  itemiz[  ed]  the  phone  tax." 
 New  Phone  Tax,  Wall  Street  Journal,  December  9,  1997.  That  is  not  a  legitimate  reason  for  regulation,  as  either  a  policy  matter  or  from  a  First  Amendment  perspective.  I  turn  to  the  First 
 Amendment  issues  below. 
 IV.  The  Standardized  Labeling  Requirements  for  Universal  Service  Charges  Raise  Grave  First  Amendment  Questions. 


 I  believe  that  the  "standardized  labeling"  regulations  for  universal  service  charges,  in  particular,  raise  serious  questions  under  the  First  Amendment.  These  regulations  involve 
 censorship  of  speech  integrally  related  to  a  political  dispute  over  social  policy  and  taxation.  As  such,  I  believe  they  govern  speech  that  is  not  merely  commercial  but  political  as  well,  and  that 
 they  are  thus  presumptively  unconstitutional.  In  any  event,  contrary  to  the  Order's  assertions,  the  standardized  labeling  regulations  do  not  pass  muster  under  the  test  for  regulation  of  purely 
 commercial  speech. 
 A. 
 At  the  outset,  some  important  facts  must  be  clarified.  The  Commission  repeatedly  emphasizes  in  this  Order  that  it  has  "not  mandated  or  limited  specific  language  that  carriers 
 utilize  to  describe  the  nature  and  purpose  of  [universal  service]  charges."  Supra  at  para.  at  56.  The  Commission  has  done  precisely  that,  however,  with  respect  to  the  labeling  of  the  charges.  It 
 issues  today  a  proposed  list  of  acceptable  words  for  characterizing  the  charges  on  line  items  and  presumably  will  issue  a  final  list  in  the  future.  See  supra  at  para.  71.  In  addition,  this  Order 
 appears  to  prohibit  any  line  items  that  indicate  the  charge  is  federally-  mandated  or  federally-imposed.  283  Surely,  this  action  "limit[  s]"  the  "specific  language"  that  carriers  may  use  when 
 speaking  about  the  charges.  Conversely,  and  by  necessary  implication,  the  Commission  bans  all  words  other  than  those  on  the  approved  list,  including  wholly  truthful  and  non-  misleading 


 Journal,  May  5,  1999,  at  B6.  Association  with  this  tax  becomes  increasingly  damaging,  as  a  political  matter,  the  higher  the  tax  is.  Also,  the  act  of  substantially  increasing  the  schools  and  libraries  charge  might  well  reinvigorate 
 the  debate  over  who  should  be  blamed  for  this  entire  matter.  School  Internet  Discount  Slated  For  More  Money  -  and  Dissension,  Washington  Post,  May  6,  1999  at  E-  3  ("  Yesterday's  announcement  may  generate  new  controversy 
 among  telephone  companies  and  Republican  lawmakers  who  have  called  the  program  the  "Gore  Tax"  because  it  is  the  vehicle  for  Vice  President  Gore's  promise  to  wire  all  of  America's  classrooms  to  the  Internet."). 
 283  Although  the  Order  discusses  the  prohibition  on  terms  such  as  "federally-  mandated"  in  the  specific  context 
 of  the  additional  language  that  carriers  may  include,  supra  at  para.  56.,  the  underlying  assumption  of  the  Order  seems  to  be  that  such  a  description  would  be  equally  unlawful  if  used  as  a  label  on  a  line-  item.  Under  the  reasoning 


 of  this  Order,  which  concludes  that  a  description  of  universal  service  charges  as  mandated  by  the  federal  government  is  misleading,  it  would  seem  that  a  line  item  conveying  the  same  message  would  be  an  unreasonable 
 practice  in  violation  of  section  201(  b). 
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 speech. 
 To  be  sure,  the  Commission  will  permit  carriers  to  use  additional  language  to  describe  the  charge  (so  long  as  that  description  is  not  "misleading,"  a  limitation  discussed  below).  But 
 that  does  not  erase  the  fact  of  the  restriction  on  permissible  labels.  As  the  Commission  acknowledges  by  its  direct  regulation  of  the  line  item  as  opposed  to  other  text  on  the  bill, 
 consumers  tend  more  to  focus  on  the  line  items  than  on  footnoted  material  at  the  bottom  of  the  page. 


 Moreover,  the  Supreme  Court  has  rejected  the  argument  that  limitations  on  commercial  speech  are  permissible  just  because  the  government  leaves  open  alternative  modes  of 
 communication.  See  Linmark  Associates,  Inc.  v.  Township  of  Willingboro,  431  U.  S.  85,  93-  94  (1977)  (applying  strict  scrutiny  to  ban  on  commercial  speech  notwithstanding  fact  that  other 
 modes  of  communication  were  unaffected  by  the  ban);  see  also  Elrod  v.  Burns,  427  U.  S.  347,  373  (1976)  ("  The  loss  of  First  Amendment  freedoms,  for  even  minimal  periods  of  time, 
 unquestionably  constitutes  irreparable  injury.").  The  Court  has  also  rejected  the  argument  that  content-  based  restrictions  --  which  these  regulations  undoubtedly  are  --  become  permissible 
 when  speech  alternatives  exist.  See  Consolidated  Edison  Co.  v.  New  York,  447  U.  S.  530,  541  (1980)  ("[  W]  e  have  consistently  rejected  the  suggestion  that  a  government  may  justify  a 
 content-  based  prohibition  by  showing  that  speakers  have  alternative  means  of  expression.")  (citing  cases). 


 It  is  also  plain  from  today's  Order  that  any  additional  language  that  carriers  may  wish  to  include  must  be  "non-  misleading"  in  the  Commission's  eyes.  See  supra  at  para.  55.  If  the 
 Commission  believes  that  it  would  be  "deceptive"  to  tie  the  charge  to  the  Commission  or  the  federal  government,  as  it  apparently  does,  then  the  companies  have  been  afforded  no  meaningful 
 outlet  at  all.  See  id.  ("  We  would  not  consider  a  description  of  [the  universal  service]  charge  as  being  'mandated'  by  the  Commission  or  the  federal  government  to  be  accurate.").  It  is 
 undeniable,  as  a  matter  of  fact,  that  the  charge  has  been  "mandated"  by  the  Commission.  The  only  possible  question  could  be  upon  whom  the  Commission  directly  levied  the  charges.  Thus, 
 the  Commission's  argument  seems  to  hang  on  the  slim  reed  that  omission  of  the  fact  that  the  charges  were  directly  levied  on  carriers,  as  opposed  to  being  levied  directly  on  consumers,  is 
 "misleading"  in  that  it  does  not  expressly  tie  accountability  for  the  charges  to  the  carriers.  Indeed,  it  is  not  even  clear  from  the  face  of  this  Order  that  carriers  could  simply  state  that  they 
 were  recovering  from  consumers  charges  imposed  upon  them  by  the  Commission  --  an  entirely  accurate  statement,  even  on  the  Commission's  theory  of  the  charges. 


 To  my  mind,  the  assignment  of  responsibility  for  these  consumer  charges  seems  less  a  question  of  pure  fact  or  "truth"  than  opinion.  As  with  most  questions  of  opinion,  it  is  one  about 
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 which  reasonable  people  can  disagree.  284  Some  carriers  possess  a  reasonable  belief  that  the  Commission,  by  levying  a  fee  on  carriers,  was  the  "but-  for"  cause  of  the  appearance  of  these 
 charges  on  consumers'  bills.  In  a  competitive  market,  they  say,  costs  are  by  definition  passed  through  to  consumers,  and  so  the  imposition  of  new  regulatory  charges  on  carriers  is  tantamount 
 to  a  charge  on  consumers.  As  long  as  the  carriers  are  subject  to  the  Commission's  understanding  of  "misleading"  statements  with  respect  to  the  charges,  however,  they  will  presumably  be 
 forbidden  by  this  agency  from  expressing  to  consumers  their  view  that  the  fees  imposed  in  connection  with  the  universal  service  fund  are  the  result  of  government  action  and  that  ultimate 
 responsibility  for  these  charges  rests  with  the  government.  By  choosing  the  very  words  that  may  be  used  to  label  federal  charges,  these  regulations  "attempt  to  give  one  side  of  a  debatable  public 
 question"  --  here,  the  government  view's  about  who  should  be  held  responsible  for  these  charges  --  "an  advantage  in  expressing  its  view  to  the  people."  City  of  Ladue  v.  Gilleo,  512  U.  S.  43,  50 
 (1994). 
 Indeed,  given  that  carriers  who  highlight  the  charges  must  employ  terms  that  prevent  them  from  disclaiming  responsibility  for  the  charges,  carriers  have  every  incentive  to  omit  the 
 line-  item  altogether.  Faced  with  a  choice  between  expressly  identifying  the  charges  on  bills  in  the  government's  terms  and  not  raising  the  issue  at  all,  carriers  "might  well  conclude  that,  under 
 these  circumstances,  the  safe  course  is  to  avoid  controversy,  thereby  reducing  the  free  flow  of  information  and  ideas  that  the  First  Amendment  seeks  to  promote."  Pacific  Electric  &  Gas  Co.  v. 
 California,  475  U.  S.  1,  14  (1986)  (internal  citation  and  quotation  omitted).  In  this  way,  the  regulations  discourage  speech  about  the  charges  altogether. 


 In  sum,  these  regulations  undoubtedly  constitute  a  limitation  on  the  speech  that  may  appear  on  line  items  in  bills:  legally  permissible  language  is  confined  to  that  which  appears  on 
 the  Commission's  list.  Conversely,  these  regulations  prohibit  all  line-  item  speech  regarding  the  charges  that  does  not  appear  on  the  list.  While  the  Commission  loudly  proclaims  that  carriers 
 are  "free"  to  provide  descriptions  of  the  charges  in  addition  to  the  standardized  labels,  it  is  clear  that  those  descriptions  will  be  subject  to  rejection  by  the  Commission  on  the  basis  that  they 
 "untruthfully"  point  the  finger  of  blame  for  the  charges  at  the  federal  government.  Finally,  given  that  speaking  about  the  charges  on  line  items  requires  the  use  of  the  government's  terminology, 
 the  scheme  deters  carriers  from  speaking  in  the  first  place.  For  the  reasons  that  follow,  this  approach  to  the  regulation  of  carriers'  speech  is  in  significant  tension  with  the  First  Amendment. 


 284  In  the  1980s,  for  instance,  President  Reagan  and  the  Democratic  Congress  disagreed  over  whether  his  tax 
 plan  represented  a  cut  in  spending,  as  opponents  of  the  plan  thought,  or  merely  a  cut  in  the  increase  of  spending,  as  he  argued.  Reasonable  people  could,  and  did,  disagree  about  how  the  plan  should  be  characterized.  And  yet  what  if 


 government  had  restricted  parties  impacted  by  the  proposal  from  calling  it  one  thing  or  the  other  --  requiring,  for  instance,  that  the  plan  only  be  referred  to  in  certain  documents  as  "a  cut  in  the  increase  of  spending"?  That  seems 
 unthinkable,  yet  all  too  similar  to  the  instant  situation. 
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 B. 
 In  this  Order,  the  Commission  applies  the  First  Amendment  test  for  limitations  on  commercial  speech  first  established  in  Central  Hudson.  285  That  test,  however,  has  been  further 
 developed  and  strengthened  in  subsequent  cases.  As  I  read  commercial  speech  doctrine,  the  regulations  are  of  dubious  validity. 


 1. 
 "It  is  well  established  that  '[  t]  he  party  seeking  to  uphold  a  restriction  on  commercial  speech  carries  the  burden  of  justifying  it.  '  "Edenfield  v.  Fane,  507  U.  S.  761,  770  (1993)  (quoting 
 Bolger  v.  Youngs  Drug  Products  Corp.,  463  U.  S.  60,  71  n.  20  (1983)).  Specifically,  the  government  must  "demonstrate  that  the  harms  it  recites  are  real  and  that  its  restriction  will  in 
 fact  alleviate  them  to  a  material  degree."  Edenfield  v.  Fane,  507  U.  S.  761,  771  (1993)  (emphasis  added).  The  Supreme  Court  has  expressly  "cautioned  that  this  requirement  [is]  critical; 
 otherwise,  '[  government]  could  with  ease  restrict  commercial  speech  in  the  service  of  other  objectives  that  could  not  themselves  justify  a  burden  on  commercial  expression."  Rubin  v.  Coors 
 Brewing  Co.,  514  U.  S.  476,  487  (1995)  (quoting  Edenfield  v.  Fane,  507  U.  S.  at  771). 
 Here,  there  is  no  proof  sufficient  to  meet  the  standard  set  in  Edenfield.  To  the  contrary,  this  Order  contains  nothing  more  than  unsupported  assertions  of  a  theoretical  link  between  the 
 Commission's  action  and  its  effect  on  the  beliefs  and  resultant  behavior  of  consumers.  Consider  the  entirety  of  the  Order's  reasoning  on  this  point: 


 The  proposed  regulation  will  ensure  that  the  labels  assigned  to  charges  related  to  federal  regulatory  action  are  consistent,  understandable,  and  do  not  confuse  or  mislead 
 consumers.  In  addition,  the  regulatory  scheme  will  encourage  carriers  to  provide  consumers  with  information  that  will  enable  them  to  understand  their 
 telecommunications  bills,  and  prevent  carriers  from  misleading  consumers  into  believing  they  cannot  "shop  around"  to  find  carriers  that  charge  less  for  fees  resulting  from  federal 
 regulatory  action. 
 Supra  at  para.  61.  This  paragraph  is  composed  of  a  string  of  conclusions  --  not  a  demonstration  of  real  harm  or  an  explanation  of  the  ways  in  which  the  regulatory  scheme  will 
 actually  and  materially  remedy  that  harm.  286 
 285  By  applying  the  three-  part  test  from  Central  Hudson,  the  Order  appears  to  presume  that  the  speech  at  issue 
 is  not  inherently  but  only  potentially  misleading.  I  think  it  open  to  challenge  whether  the  speech  at  issue  --  i.  e.,  labels  or  descriptions  such  as  "FCC-  mandated"  --  are  indeed  potentially  misleading.  See  generally  infra  at  Section 


 III.  By  assuming  that  the  relevant  speech  is  at  most  only  potentially  misleading,  however,  the  Order  does  not  deny  that  it  is  protected  by  the  First  Amendment. 
 286  This  same  explanation  is  repeated  for  purposes  of  the  first  prong  (the  substantiality  of  the  government's 
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 Specifically,  where  is  the  evidence  that  telephone  customers  will  be  perplexed  by  a  description  of  the  charge  as  an  FCC-  mandated,  or  federally-  required,  fee?  287  (I  suspect  the 
 American  consumer  would  understand  this  explanation  all  too  well.)  In  fact,  there  is  no  record  that  any  carrier  has  even  used  such  a  label.  See  id.  at  para.  51.  What  is  the  basis  for  the  assertion 
 that  any  confusion  resulting  from  the  use  of  the  banned  labels  would  result  in  consumers'  belief  that  the  fee  is  nonvariable  from  company  to  company?  Further,  what  proof  is  there  that  any  such 
 belief  that  materialized  in  the  minds  of  consumers  would  prevent  them  from  comparing  long  distance  companies  on  the  basis  of  price?  Finally,  what  proof  is  there  that  the  agency's  hand-picked 
 words  will  in  fact,  not  just  in  theory  --  and  materially  --  alleviate  the  posited  harm? 
 Moreover,  the  Order  does  not  even  attempt  to  tie  these  various  conclusions  back  to  the  "ultimate  goal"  of  the  regulation,  "ensur[  ing]  that  consumers  pay  fair  and  efficient  rates."  Id.  at 
 para.  60.  Even  if  one  assumed  the  soundness  of  each  of  the  foregoing  steps  in  the  Commission's  chain  of  logic,  there  is  no  explanation  of  how  unfair  or  inefficient  prices  for  telephone  service 
 would  result  from  a  consumer  propensity  not  to  shop  on  the  basis  of  universal  service  charges.  Does  the  Commission  intend  to  suggest  that  it  is  "unfair"  for  consumers  to  pay  rates  that  include 
 these  charges  in  toto,  or  that  such  rates  would  be  "inefficient"?  The  Commission  cannot  mean  that,  however,  because  it  expressly  permits  carriers  to  pass  the  charges  on  in  full.  See  Federal-State 
 joint  Board  on  Universal  Service,  12  FCC  Rcd  8776,  9209  (1997).  Also,  the  prices  charged  by  these  long  distance  carriers  have  been  deregulated  and  are  thus  by  definition 
 efficient;  the  Commission  itself  states  that  "competition  should  ensure  that  [these  charges]  are  recovered  in  an  appropriate  manner."  Supra  at  para.  54.  I  cannot  discern  any  connection  in  this 
 Order  between  consumers'  tendency  to  price  shop  on  the  basis  of  these  charges  and  the  ultimate  fairness  of  rates. 


 In  short,  there  is  no  record  to  support  any  of  the  Commission's  suppositions  regarding  the 
 interest),  and  there  it  is  phrased  entirely  in  the  conditional.  "Line  item  charges  are  being  labeled  in  ways  that  could  mislead  consumers  by  detracting  from  their  ability  to  fully  understand  the  charges  that  are  appearing  on  their 
 monthly  bills,  thereby  reducing  their  propensity  to  shop  around  for  the  best  value."  Supra  at  para.  60  (emphasis  added).  "Consumers  who  are  misled  into  thinking  the  charges  are  federally  mandated  .  .  .  could  decide  that  such 
 shopping  would  be  futile."  Id.  (emphasis  added).  "Lack  of  standard  labeling  could  make  comparison  shopping  infeasible."  Id.  (emphasis  added).  The  theoretical  possibility  of  harm,  of  course,  is  not  sufficient  to  justify  a 
 restriction  on  commercial  speech,  as  noted  above.  The  substantiality  of  the  government's  asserted  interest  is  thus  also  quite  vulnerable  to  attack. 
 287  To  the  extent  the  Commission  seeks  to  rely  on  the  number  of  phone  calls  received  from  consumers  as  proof 
 of  "confusion,"  see  supra  at  para.  48  &  n.  29,  that  reliance  is  misplaced.  The  summary  of  complaints  received  does  not  distinguish  between  consumers  who  were  confused  by  unclear  charges  and  those  disputing  charges.  My 


 experience  is  that  these  consumers  were  not  "confused"  by  the  charges,  nor  were  they  under  the  misimpression  that  they  could  not  shop  around.  Rather,  they  were  angry  about  the  imposition  of  what  they  perceived  as  a  new  federal 
 tax.  Moreover,  this  evidence  does  not  adequately  differentiate  complaints  about  "cramming"  and  "slamming"  from  complaints  about  universal  service  charges. 
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 way  in  which  these  regulations  advance  its  posited  goal  of  fair  and  efficient  prices.  The  notion  of  consumer  confusion  from  putatively  misleading  labels,  and  of  the  harms  resulting  from  any 
 such  confusion,  is  entirely  conjectural.  The  idea  that  the  words  selected  by  the  Commission  will  cure  that  confusion  is  unfounded  by  any  empirical  reality.  Nor  is  there  any  nexus  between  the 
 consumer  behavior  that  the  Commission  asserts  will  result  from  the  use  of  certain  labels  and  the  ultimate  goal  of  ensuring  fair  prices. 


 As  explained  above,  the  "direct  advancement"  prong  "is  not  satisfied  by  mere  speculation  or  conjecture."  Edenfield  v.  Fane,  507  U.  S.  at  770;  see  also  44  Liquormart,  Inc.  v.  Rhode 
 Island,  517  U.  S.  484,  506  (1996)  (lead  opinion)  (rejecting  State's  argument  than  ban  on  alcohol  price  advertising  advanced  its  interest  in  temperance  because  State  adduced  "no  findings  of  fact, 
 or  indeed  any  evidentiary  support  whatsoever");  Ibanez  v.  Florida,  512  U.  S.  136,  146  (1994)  ("  If  the  protections  afforded  commercial  speech  are  to  retain  their  force,  we  cannot  allow  rote 
 invocation  of  the  words  'potentially  misleading'  to  supplant  the  [government's]  burden  [of  proof]");  Zauderer  v.  Ohio,  471  U.  S.  626,  648  (1985)  (rejecting  State's  asserted  interest  in  ban  on 
 illustrations  in  advertising  by  attorneys  because  "[  t]  he  State's  arguments  amount  to  little  more  than  unsupported  assertions;  nowhere  does  the  State  cite  any  evidence  or  authority  of  any  kind 
 for  its  contention");  Linmark  Assoc.,  Inc.  v.  Willingboro,  431  U.  S.  at  95-  96  (holding  that  record  did  not  support  respondents'  "fears"  that  certain  behavior  would  result  if  speech  were  permitted 
 and  did  not  confirm  the  "assumption  that  proscribing"  speech  would  have  the  government's  presumed  effect). 


 The  standardized  labeling  regulations  bear  other  inadequacies  under  the  "direct  advancement"  prong  of  Central  Hudson.  Close  examination  of  the  entire  scheme  reveals  that  it 
 is  structured  so  as  to  preclude  direct  advancement  of  the  Commission's  posited  goal. 
 The  Commission  does  not  require  line  items  for  universal  service  charges,  even  for  carriers  that  choose  to  recover  these  charges  from  end-  users.  Carriers  who  wish  to  include  the 
 entirety  of  these  charges  in  their  general  rates,  without  breaking  them  out  separately,  are  free  to  do  so.  See  supra  at  para.  54  (carriers  may  decide  "whether  to  include  these  charges  as  part  of 
 their  rates,  or  to  list  the  charges  in  separate  line  items").  Carriers  who  take  this  approach,  however,  would  be  just  as  able  to  "mislead"  consumers  into  deciding  not  to  shop  around  for 
 providers  that  absorb  more  of  the  cost  of  the  charges;  their  customers  will  never  know  that  the  charges  are  being  passed  on  to  them.  Likewise,  there  would  be  no  way  for  these  customers  to 
 contrast  the  cost  of  these  charges  with  those  imposed  by  other  carriers,  since  their  bills  would  not  specify  the  amount  of  the  charges  at  all.  If  the  Commission  truly  means  to  further  uniformity 
 and  accuracy  with  respect  to  universal  service  charges  so  that  consumers  can  compare  the  charges  across  bills  and  shop  on  that  basis,  then  it  makes  no  sense  to  permit  carriers  to  conceal 
 the  charges  in  their  general  rates.  This  critical  aspect  of  the  regulations  "directly  undermine[  s]  and  counteract[  s]  [the]  effect  of"  the  entire  scheme.  Rubin  v.  Coors  Brewing  Co.,  514  U.  S.  at 
 489. 
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 Functionally,  the  lack  of  a  requirement  that  carriers  break  out  universal  service  charges  in  a  separate  line  item  allows  any  carrier  that  wishes  to  opt  out  of  the  labeling  scheme.  To  qualify 
 for  this  wholesale  exemption,  carriers  must  simply  encompass  the  charges  in  overall  rates.  There  is  no  requirement  of  disclosure  regarding  the  existence  or  nature  of  the  charges  for  carriers  who 
 elect  this  course,  and  there  is  nothing  in  the  regulations  that  would  prevent  all  carriers  from  doing  so.  As  a  general  matter,  broad  exceptions  that  appear  unrelated  to  the  government's 
 asserted  interest  create  serious  obstacles  to  an  affirmative  finding  under  the  "direct  advancement"  prong.  See,  e.  g.,  Rubin  v.  Coors  Brewing  Co.,  514  U.  S.  at  488  (holding  that 
 exceptions  to  labeling  ban  on  malt  beverage  alcohol  content  for  other  kinds  of  alcohol  rendered  scheme  irrational);  Valley  Broadcasting  v.  FCC,  107  F.  3d  1328,  1334  (9th  Cir.  1997)  (holding 
 that  exceptions  to  casino  advertising  ban  for  other  kinds  of  gambling  undermined  purpose  of  ban).  It  could  easily  be  argued  that  this  functional  exception,  which  could  easily  swallow  the 
 rule  itself,  renders  the  regulatory  support  for  the  Commission's  purposes  "ineffective  [and]  remote."  Edenfield  v.  Fane,  507  U.  S.  at  769.  288 


 In  the  specific  context  of  potentially  misleading  speech,  the  law  also  requires  that  "the  record  indicate[]  that  a  particular  form  or  method  of  advertising  has  in  fact  been  deceptive" 
 before  it  can  be  regulated  consistent  with  the  First  Amendment.  In  re  R.  M.  J.,  455  U.  S.  191  (1982)  (citing  Bates  v.  State  Bar  of  Arizona,  433  U.  S.  350  (1977)).  As  explained  above,  there  is 
 no  record  proof  that  the  use  of  labels  such  as  "FCC-  mandated"  or  "governmentally-  required"  has  actually  caused  consumers  to  be  misled  into  thinking  that  the  amount  of  universal  service  fees 
 charged  to  them  was  set  by  law.  I  am  not  aware  of  any  instance  of  such  labels  actually  being  used  --  and  the  Order  certainly  does  not  point  to  any  --  and  thus  it  hard  to  see  what  evidence 
 there  could  be  of  actual  deception.  In  contrast  to  other  commercial  speech  cases,  the  record  before  us  contains  no  "substantial  and  well-  demonstrated"  practice  of  misuse  of  certain  titles  for 
 the  charges.  Friedman  v.  Rogers,  440  U.  S.  1,  15  (1979). 
 For  these  reasons,  I  do  not  think  that  it  can  be  said  that  the  government  has  carried  its  burden  of  showing  that  these  regulations  will  directly  and  materially  advance  the  goal  of 
 ensuring  that  consumers  will  engage  in  price  comparison  on  the  basis  of  universal  service  charges  among  telephone  carriers.  Accordingly,  the  regulations  appear  vulnerable  to 
 invalidation  by  a  reviewing  court  on  this  ground  alone.  289 
 288  "[  E]  xemptions  from  an  otherwise  legitimate  regulation  of  a  medium  of  speech  may  be  noteworthy  for  a 
 reason  quite  apart  from  the  risks  of  viewpoint  and  content  discrimination:  They  may  diminish  the  credibility  of  the  government's  rationale  for  restricting  speech  in  the  first  place."  City  of  Ladue  v.  Gilleo,  512  U.  S.  at  52.  See  infra  n. 


 7  (discussing  weaknesses  in  substantiality  of  Commission's  posited  interest).  289 
 Respectfully,  I  submit  that  the  actual  purpose  of  these  regulations  --  and  a  theory  on  which  the  entire  plan  hangs  together  perfectly  --  is  to  discourage  consumers  from  blaming  this  agency  in  particular  or  the  federal 


 government  generally  for  this  increase  in  telephone  charges.  See  generally  infra  at  Section  III.  Carriers  who  insist  on  breaking  out  the  charges  and  listing  them  on  a  separate  line,  thereby  bringing  them  to  the  attention  of  their 
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 2. 
 Since  Central  Hudson,  the  Supreme  Court  has  also  expanded  upon  the  fourth  prong  of  commercial  speech  analysis,  the  question  whether  the  regulation  is  more  extensive  than 
 necessary  to  serve  the  asserted  interest.  In  City  of  Cincinnati  v.  Discovery  Network,  Inc.,  the  Court  explained  that  although  "[  a]  regulation  need  not  be  'absolutely  the  least  severe  that  will 
 achieve  the  desired  end,  '  .  .  .  if  there  are  numerous  and  obvious  less-  burdensome  alternatives  to  the  restriction  on  commercial  speech,  that  is  certainly  a  relevant  consideration  in  determining 
 whether  the  "fit"  between  ends  and  means  is  reasonable."  507  U.  S.  410,  417  n.  13  (1993)  (quoting  Board  of  Trustees  v.  Fox,  492  U.  S.  469,  480  (1989)).  290  Recently,  the  D.  C.  Circuit 
 extended  the  strict  evidentiary  standard  of  Edenfield  v.  Fane,  which  dealt  with  the  "direct  advancement  prong,"  to  this  fourth  and  final  prong.  See  Pearson  v.  Shalala,  164  F.  3d  650,  659 
 n.  9  (1999)  ("[  W]  e  see  no  reason  why  the  government's  evidentiary  burden  at  the  final  step  of  Central  Hudson  should  be  any  less  than  at  the  direct  advancement  step."). 


 The  standardized  labeling  regulations  are  susceptible  to  constitutional  doubt  under  this  last  part  of  Central  Hudson  as  well.  In  arguing  that  these  regulations  are  narrowly  tailored,  the 
 Commission  asserts:  "[  W]  e  only  prescribe  that  these  charges  be  presented  using  a  standardized  label."  Supra  at  para.  at  62.  This  characterization  overlooks  entirely  the  burdens  on  speech 
 imposed  by  the  regulations.  See  generally  Part  IV.  A.  The  regulations  mandate  not  just  standardization,  as  the  Commission  claims,  but  require  carriers  to  use  government-  approved 
 adjectives  and  nouns  to  characterize  the  charges  in  line  items.  By  necessary  implication,  the  regulations  outlaw  the  use  on  line  items  of  any  and  all  other  words,  including  accurate  ones. 
 Additional  language  that  carriers  include  elsewhere  on  bills  to  explain  the  charges  are  subject  to  the  Commission's  limitation  on  "misleading"  statements.  Contrary  to  the  assertion  of  the  Order, 
 the  regulations  clearly  "limit[]  specific  language  that  carriers  utilize  to  describe  the  nature  and  purpose  of  the  charges."  Id.  291  In  terms  of  their  impact  on  speech,  the  regulations  are  quite 


 customers,  may  only  apply  certain,  government-  approved  labels  to  the  charges,  which  discourages  speech  about  the  charges  in  the  first  instance.  Other  carriers,  by  simply  including  the  charge  in  general  rates,  are  free  not  to  mention 
 it  at  all.  Either  way,  public  discussion  of  the  charges  in  bills  is  kept  to  a  minimum;  and,  when  the  charges  are  discussed,  they  may  not  be  closely  tied  to  the  federal  government. 
 290  Although  the  Commission  relies  on  Fox  in  its  Order,  the  interpretation  of  the  fourth  Central  Hudson  prong 
 in  that  case  was  clarified  in  City  of  Cincinnati,  as  noted  above.  Moreover,  in  the  subsequent  case  of  44  Liquormart,  Inc.  v.  Rhode  Island,  which  produced  no  opinion  for  the  Court,  two  Justices  interpreted  the  fourth  prong  in  an 


 especially  restrictive  way,  and  one  Justice  would  have  jettisoned  it  altogether.  See  517  U.  S.  484,  524-  25  (1996)  (Thomas,  J.,  concurring)  (noting  that  application  of  fourth  prong  by  Justices  Stevens  and  O'Connor  was  stricter  than 
 traditional  application  and  that,  if  their  approach  were  adhered  to,  it  would  invalidate  "restrictions  on  speech  whenever  a  direct  regulation  .  .  .  would  be  an  equally  effective  method"  of  advancing  the  government's  end). 
 291  For  these  reasons,  the  Order's  attempt  to  distinguish  44  Liquormart  v.  Rhode  Island,  see  supra  at  para.  63 
 ("[  W]  e  ban  no  speech,  so  carriers  remain  free  to  develop  their  own  descriptions  of  the  nature  and  purpose  of  these  charges,  subject  only  to  a  labelling  requirement"),  is  unpersuasive. 
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 broad. 
 Yet,  if  ensuring  that  consumers  can  compare  universal  service  charges  across  bills  is  the  goal  here,  that  aim  could  be  fully  achieved  by  a  rule  requiring  standardization  and  nothing  more. 
 For  instance,  industry  could  agree  to  a  certain  phrase,  and  the  Commission  could  simply  require  or  encourage  uniform  usage  of  that  phrase.  Indeed,  the  Commission  takes  just  that  sort  of  non-interventionist 
 approach  to  speech  with  respect  to  charges  for  services  rendered.  See  supra  at  para.  42  ("  Although  we  decline  to  formulate  standardized  descriptions,  we  encourage  carriers  to 
 develop  uniform  terminology.  .  .  We  believe  industry  is  better  equipped  than  the  Commission  to  develop  .  .  .  standardized  descriptions  that  are  compatible  with  the  character  limitations  for  text 
 messages  and  other  operational  restrictions.  .  .  .").  292  Given  the  stated  goal  of  price  comparison,  there  is  no  ostensible  reason  --  other  than  suppression  of  the  point  of  view  that  the  charge  is  a 
 federal  fee  or  even  tax  for  which  the  government  should  be  held  accountable  --  that  the  Commission  itself  would  need  to  select  or  approve  the  words  that  can  be  used  to  describe 
 universal  service  charges.  That  extra  step  is  simply  not  necessary  to  serve  the  putative  goal  of  uniformity. 


 To  the  extent  that  the  Commission  is  concerned  that  certain  characterizations  of  the  charges  (specifically,  those  suggesting  the  charges  are  required  by  the  government)  will  in  fact 
 "mislead"  consumers  into  the  decision  not  to  price  shop,  the  regulations  are  more  burdensome  than  necessary  to  serve  that  goal  as  well.  Instead  of  forbidding  all  speech  except  that  which 
 appears  on  its  final  list,  the  Commission  could  have  allowed  carriers  to  speak  but  prohibited  misleading  statements;  that  is,  the  presumption  could  have  been  in  favor  of  speech,  not  against  it. 
 Case-  by-  case  adjudication  of  the  "truthfulness"  of  specific  phrases  used  to  describe  the  charges  would  be  vastly  less  intrusive  than  the  expansive,  prophylactic  rules  adopted  in  today.  The 
 Commission's  selection  of  a  particular  label  or  labels  necessarily  excludes  a  vast  category  of  entirely  truthful,  nonmisleading  ways  of  describing  the  charges  on  line  items.  See  generally 
 Pearson  v.  Shalala,  164  F.  3d  at  655  (explaining  that  government  "may  not  place  an  absolute  prohibition  on  ...  potentially  misleading  information  ...  if  the  information  also  may  be  presented 
 in  a  way  that  is  not  deceptive")  (citing  In  re  R.  M.  J.,  455  U.  S.  191,  203  (1982));  see  also  Zauderer  v.  Office  of  Disciplinary  Counsel  of  the  Supreme  Court  of  Ohio,  471  U.  S.  at  648-  649 
 (holding  that  State's  "unsupported  assertions"  were  insufficient  to  justify  prohibition  on  attorney  advertising  and  that  "broad  prophylactic  rules  may  not  be  so  lightly  justified  if  the  protections 
 afforded  commercial  speech  are  to  retain  their  force"). 
 In  addition,  the  Commission  has  chosen  to  suppress  speech  instead  of  permitting  the  carriers  to  cure  whatever  confusion  might  be  created  by  a  label  such  as  "federally-  imposed"  with 


 292  Notably,  the  Order  fails  to  explain  why  the  reasons  that  counsel  in  favor  of  non-  intervention  on  specific 
 terminology  when  it  comes  to  charges  for  services  rendered  are  suddenly  inapposite  when  it  comes  to  universal  services  charges. 
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 more  detailed  disclosures  regarding  the  nature  and  purpose  of  the  fee.  See  supra  at  para.  59  (expressly  "declin[  ing]  to  specify  any  periodic  notification  to  consumers  providing  additional 
 explanation  of  any  charges  resulting  from  federal  regulatory  action"  because  "requiring  standard  labels"  was  sufficient  action).  As  the  D.  C.  Circuit  has  ruled,  however,  "[  i]  t  is  clear  .  .  .  that  when 
 government  chooses  a  policy  of  suppression  over  disclosure  --  at  least  where  there  is  no  showing  that  disclosure  would  not  suffice  to  cure  misleadingness  --  government  disregards  a  'far  less 
 restrictive'  means."  Pearson  v.  Shalala,  164  F.  3d  at  658  Even  assuming  that  it  is  potentially  "misleading"  to  apply  the  words  "FCC-  mandated"  to  universal  service  charges  on  a  line  item, 
 that  would  seem  remediable  by  inclusion  in  the  bill  of  a  more  complete  explanation  of  the  technical  details  of  the  charges.  And  the  Commission  cannot  justify  its  rejection  of  disclosure  on 
 the  grounds  that  it  has  already  adopted  the  more  restrictive  approach;  rather,  the  Commission  must  explain  why  requiring  such  periodic  notification  would  not  suffice  to  cure  the  alleged 
 problem  of  misleadingness.  Requiring  more  speech  about  the  nature  of  the  charges,  instead  of  banning  even  potentially  misleading  short-  hand  names  for  them,  is  "a  far  less  restrictive  means" 
 of  combatting  consumer  "confusion"  over  the  variability  of  the  charges  as  among  carriers. 
 Moreover,  the  direct  approach  of  regulating  the  underlying  conduct  --  as  opposed  to  the  indirect  approach  of  regulating  speech  about  the  conduct  --  is  also  presumably  available  to  the 
 Commission.  If  the  Commission  believes  that  the  cost  of  the  universal  service  program  should  be  borne  by  carriers  alone,  or  that  any  charges  that  are  passed  on  should  be  allocated  equitably, 
 then  it  could  (assuming  statutory  authority)  have  regulated  carriers'  recovery  of  the  cost  of  these  charges.  Cf.  44  Liquormart  v.  Rhode  Island,  517  U.  S.  at  507  (holding  that  State  failed  to  "satisfy 
 the  requirement  that  its  restriction  on  speech  be  no  more  extensive  than  necessary"  because  "higher  prices  can  be  maintained  .  .  .  by  direct  regulation").  But  the  Commission  has  expressly 
 declined  to  regulate  recovery  of  the  charges,  see  supra  at  para.  49  ("[  W]  e  decline  .  .  .  to  limit  the  manner  in  which  carriers  recover  these  costs  of  doing  business"),  choosing  instead  to  suppress 
 speech  regarding  liability  for  the  charges.  Under  the  First  Amendment,  that  is  a  highly  problematic  approach.  See  generally  44  Liquormart  v.  Rhode  Island,  517  U.  S.  at  512  ("  The  First 
 Amendment  directs  that  government  may  not  suppress  speech  as  easily  as  it  may  suppress  conduct,  and  that  speech  restrictions  cannot  be  treated  as  simply  another  means  that  the 
 government  may  use  to  achieve  its  ends")  (emphasis  added);  see  also  id.  at  520  (Thomas,  J.,  concurring)  (noting  emphasis  in  modern  commercial  speech  caselaw  on  "the  dangers  of 
 permitting  the  government  to  do  covertly  what  it  might  not  have  been  able  to  muster  the  political  support  to  do  openly"). 


 Finally,  the  Commission  could  have  issued  public  notices  or  bulletins  to  increase  public  awareness  of  the  nature  of  the  charges.  It  could  have  explained  publicly  its  view  that  universal 
 service  charges  are  imposed  directly  on  carriers,  that  transfer  of  the  costs  to  consumers  is  a  "business  choice"  for  carriers,  and  that  consumers  should  use  this  information  in  evaluating 
 carriers.  Cf.  id.  at  507  (suggesting  that  public  educational  campaigns  to  combat  the  posited  problem  are  less  restrictive  alternatives  to  speech  restrictions);  see  also  id.  (citing  Linmark  for 
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 proposition  that  "State  [could]  use  .  .  .  counter-  speech,  rather  than  speech  restrictions,  to  advance  its  interests").  On  this  record,  there  is  no  reason  to  think  that  such  a  educational  campaign  would 
 be  any  less  effective  in  terms  of  its  impact  on  consumers'  tendency  to  engage  in  price  comparison  than  the  scheme  adopted  in  these  regulations. 


 For  the  above  reasons,  the  labeling  regulations  impinge  on  speech  to  a  greater  extent  than  needed  to  advance  either  the  goal  of  uniformity  or  of  deception,  much  less  the  "ultimate"  goal  of 
 efficient  and  fair  prices. 
 C. 
 While  the  regulations  are  highly  questionable  under  commercial  speech  doctrine,  I  would  dispute  the  characterization  of  the  speech  at  issue  as  purely  commercial.  As  the  Court  and 
 individual  Justices  have  repeatedly  recognized,  the  commercial  is  often  intertwined  with  the  political.  See,  e.  g.,  Virginia  State  Board  of  Pharmacy  v.  Virginia  Citizens  Consumer  Council, 
 Inc.,  425  U.  S.  748,  765  (1976)  (explaining  that  unless  consumers  are  informed  about  the  operation  of  commercial  markets,  they  cannot  establish  "intelligent  opinions  as  to  how  that 
 system  ought  to  be  regulated  or  altered");  44  Liquormart,  Inc.  v.  Rhode  Island,  517  US  at  520  (Thomas  J.,  concurring)  (observing  that  "[  i]  n  case  after  case.  .  .  the  Court  .  .  .  [has].  .  .  stress[  ed]  . 
 .  .  the  near  impossibility  of  severing  'commercial  speech'  from  speech  necessary  to  democratic  decisionmaking").  Although  the  majority  struggles  to  contain  the  carriers'  speech  to  the 
 commercial  category,  I  submit  that  speech  about  the  nature  and  purpose  of  universal  service  charges  is  intensely  political. 


 The  facts  of  this  case  involve  language  on  a  telephone  bill  and  thus,  at  first  blush,  might  be  considered  purely  commercial.  But  if  one  looks  closer,  it  becomes  clear  that  this  speech  does 
 far  "more  than  propose  a  commercial  transaction."  Pittsburgh  Press  Co.  v.  Human  Relations  Comm'n,  413  U.  S.  376,  385  (1973).  Nor  does  it  constitute  "expression  related  solely  to  the 
 economic  interests  of  the  speaker  and  its  audience."  Central  Hudson,  447  U.  S.  at  561.  Rather,  the  speech  at  issue  --  brief  descriptions  of  the  origin  and  purpose  of  universal  service  charges  -- 
 attempts  to  identify  to  the  consumer  the  cause  and  intended  use  of  these  charges.  Accountability  for  charges  that  some  consider  a  tax  is  not  just  a  business  matter,  but  a  highly  political  one. 
 Neither  the  government  nor  the  telephone  industry  wants  to  be  viewed  by  the  public  as  the  perpetrator  or  beneficiary  of  these  new  federally-  related  charges:  for  carriers  it  may  be  bad 
 public  relations,  but  for  government  officials  it  is  bad  politics.  Few  politicians  welcome  the  opportunity  to  be  associated  with  a  new  tax.  293 


 293  The  history  of  the  underlying  program  and  of  carriers'  billing  policies  reveals  a  deeply  political  debate, 
 ranging  from  matters  such  as  the  importance  of  internet  access  in  schools  and  libraries  to  the  impact  of  the  program  on  potential  presidential  candidacies.  See  generally  infra  Part  III  (documenting  background  of  program  and  billing 


 policies);  see  also  TIME,  Gore's  Costly  High  Wire  Act,  at  52,  May,  25  1998  ("  What  once  seemed  an  unassailable  idea  is  now  ensnared  in  presidential  politics,  the  byzantine  working  of  phone  deregulation  and  the  design  flaws  of  a 
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 The  speech  at  issue  may  also  involve  explicit  or  implicit  criticism  of  the  charges  by  carriers.  It  may  certainly  trigger  explicit,  even  vehement,  criticism  of  the  charges  and  the 
 programs  that  they  support  by  consumers.  294  Surely,  discussion  about  the  "true"  nature  of  these  charges  --  whether  on  a  carrier's  bill  or  editorial  page  --  constitutes  discussion  of  a  public  issue. 
 As  the  Supreme  Court  has  made  clear:  "There  is  no  question  that  speech  critical  of  the  exercise  of  the  [government's]  power  lies  at  the  very  center  of  the  First  Amendment."  Gentile  v.  Nevada, 
 501  U.  S.  1030,  1033  (1991). 
 The  nub  of  these  regulations  is  whether  it  is  "misleading"  for  carriers  to  say  that  universal  service  charges  are  "FCC-  mandated,"  "federally-  imposed,"  or  even  that  they  are  simply 
 recovering  charges  imposed  on  them  by  the  FCC.  With  respect  to  the  breadth  of  the  Commission's  prohibition  on  "misleading"  speech,  the  General  Counsel  of  this  agency  stated 
 publicly  that  carriers  would  be  flatly  prohibited  from  describing  the  charges  (even  uniformly)  as  "politician  X's  tax."  Commission  Public  Meeting,  April  15,  1999.  This  strikes  me  as  a  stunning 
 limitation,  from  a  First  Amendment  perspective.  Referring  to  a  fee,  program,  or  tax  as  the  creation  of  a  particular  government  official,  agency,  or  entity  --  whether  to  claim  credit  or  cast 
 blame  --  is  not  merely  commercial  speech.  Such  references  involve  core  political  expression. 
 Admittedly,  the  government  can  regulate  the  truth  of  facts  in  advertising.  But,  as  suggested  above,  these  regulations  do  not  concern  the  accuracy  of  an  objective,  readily  verifiable 
 fact,  one  of  the  original  justifications  for  regulation  of  commercial  speech.  See  Virginia  Pharmacy  Bd.,  425  U.  S.  at  771  &.  n.  24.  Rather,  these  regulations  involve  politically  charged 
 speech,  i.  e.  statements  indicating  who  should  be  held  responsible  for  the  imposition  of  this  charge  on  the  American  telephone  consumer.  Government  assessment  of  the  "truth"  regarding 
 its  own  responsibility  for  consumer  charges  is  entirely  different  than  government  assessment  of  the  accuracy  of,  say,  a  third  party's  interest  rate  quotation.  295  The  incentives  for  governmental 


 funding  scheme  that  camouflages  the  costs  of  a  huge  new  federal  program  by  putting  it  on  people's  phone  bills.").  294 
 See,  e.  g.,  USA  Today,  Shocked  by  e-  taxes,  May  5,  1999  at  26-  A:  "The  expenditure  for  computers  is  obscene.  I  want  children  to  read,  comprehend,  write  legibly  with  correct  spelling  and  be  able  to  add  two  and  two 


 without  a  calculator.  .  .  .  The  wondrous  part  of  all  this  is  that  a  close  look  at  your  phone  bill  shows  a  charge  on  your  long-  distance  calls  to  pay  for  this  boondoggle.  This  is  due  to  a  tax  instigated  by  Al  Gore  and  the  Federal 
 Communications  Commission.  .  .  .  My  phone  bill  has  a  whole  page  of  various  little  charges  for  nonsense.  My  base  rate  is  $28  before  any  long  distance  calls.  Thank  you,  big  government." 
 295  The  analogy  to  the  Truth  in  Lending  Act,  see  supra  at  para.  62,  does  not  prove  very  much.  First,  the  fact 
 that  the  Act  has  not  been  challenged  as  violative  of  the  First  Amendment  does  not  establish  its  constitutionality.  Second,  the  question  whether  that  statute  possesses  the  required  fit  between  means  and  ends  is  one  that  turns,  in 


 part,  on  the  particular  characteristics  of  that  legislative  plan;  the  answer  to  that  inquiry  may  well  be  different  than  the  answer  here.  Last,  that  Act  requires  disclosure  of  objective,  readily  verifiable  information,  such  as  the 
 applicable  annual  percentage  rate  for  credit  transactions  and  the  way  in  which  rates  are  calculated.  Requiring  disclosure  of  that  kind  of  information  is  a  far  cry  from  compelling  carriers  to  convey  a  politically  freighted  message 
 that  is  biased  against  the  carriers'  views.  Cf.  Pacific  Gas  &  Elec.  Co.  v.  California,  475  U.  S.  1,  n.  12  (1986). 
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 self-  dealing  and  self-  protection  in  the  former  case,  at  the  expense  of  free  speech  about  government  activity,  are  obvious. 
 For  the  foregoing  reasons,  I  do  not  believe  that  this  Order  "involv[  es]  only  commercial  speech."  Central  Hudson  v.  New  York,  447  U.  S.  at  562  n.  5  (emphasis  added).  To  the  contrary, 
 the  speech  governed  by  the  labeling  rules  involves  questions  of  governmental  accountability  for  charges  used  to  support  federal  programs.  It  thus  "extends  well  beyond  speech  that  proposes  a 
 business  transaction  .  .  .  and  includes  the  kind  of  discussion  of  'matters  of  public  concern'  that  the  First  Amendment  both  fully  protects  and  implicitly  encourages."  Pacific  Electric  &  Gas  Co.  v. 
 California,  475  U.  S.  at  8  (citation  omitted). 
 Accordingly,  strict  scrutiny  --  rather  than  the  more  lenient  scrutiny  of  Central  Hudson  --  might  well  apply  to  these  regulations.  Under  that  standard  of  review,  it  is  doubtful  that  these 
 regulations  would  survive  judicial  review.  See,  e.  g.,  Pacific  Gas  &  Electric  Co.  v.  California,  475  U.  S.  1  (holding  that  State  could  not  require  private  company  to  include  in  its  bills  messages 
 with  which  it  disagreed);  Consolidated  Edison  Co.  v.  New  York,  447  U.  S.  530  (holding  that  State  could  not  forbid  private  company  from  including  in  its  bills  inserts  discussing  issues  of  public 
 policy). 
 D. 
 To  sum  up,  I  doubt  that  these  regulations  could  survive  either  the  third  or  fourth  prong  of  Central  Hudson.  The  Commission  has  not  shown  that  the  posited  harms  of  consumer 
 misunderstanding  about  the  mandatory  nature  of  the  charges,  and  the  purportedly  consequent  decision  not  to  price  shop,  are  real;  that  these  harms  have  any  causal  connection  to  the  goal  of 
 fair  prices;  and  that  regulation  of  the  uniformity  and  truthfulness  of  descriptions  of  universal  service  charges  will  actually  and  materially  advance  that  goal.  Moreover,  the  Order's  yawning 
 loophole,  which  affords  carriers  the  ability  to  opt  out  of  the  labelling  rules  altogether  by  not  mentioning  the  charges  on  bills  while  still  recovering  the  costs  in  per-  minute  rates,  severely 
 undermines  the  goal  of  allowing  consumers  to  compare  universal  services  charges.  Worse,  it  has  the  effect  of  encouraging  carriers  not  to  speak  about  the  charges  in  the  first  place.  Finally, 
 numerous  and  obvious  alternatives  to  these  sweeping,  preventative  speech  restrictions  exist. 
 Assuming  for  the  sake  of  argument  that  these  regulations  are  permissible  under  the  Central  Hudson  test,  I  do  not  think  that  the  speech  governed  by  these  rules  can  be  made  to  fit  in 
 the  "commercial"  box.  The  regulated  messages,  which  go  to  public  accountability  for  these  charges,  are  fraught  with  political  significance.  It  is  entirely  possible,  if  not  likely,  that  these 
 regulations  enjoy  the  full  constitutional  protections  afforded  speech  regarding  public  issues.  If  that  protection  obtains,  these  regulations  are  presumptively  violative  of  the  First  Amendment.  296 


 296  The  labeling  regulations  are  troublesome  under  other  strains  of  First  Amendment  precedent.  First,  they 
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 The  Supreme  Court  has  explained  that  "the  First  Amendment  directs  us  to  be  skeptical  of  regulations  that  seek  to  keep  people  in  the  dark  for  what  the  government  perceives  to  be  their 
 own  good."  44  Liquormart  v.  Rhode  Island,  517  U.  S.  at  503.  We  should  be  even  more  skeptical  of  the  instant  regulations:  here,  the  government  seeks  to  keep  people  in  the  dark  not  for  their 
 own  good,  but  to  protect  its  own  vested  interests.  Governmental  self-  insulation  from  public  criticism  and  accountability,  by  regulation  of  the  "misleading"  nature  of  private  speech  that  seeks 
 to  attach  responsibility  for  certain  developments  to  the  government,  is  antithetical  to  the  values  embodied  in  the  First  Amendment. 


 could  fall  as  content-  based  restrictions,  even  if  the  speech  at  issue  were  found  to  be  purely  commercial.  R.  A.  V.  v.  City  of  St.  Paul,  Minnesota,  505  U.  S.  377  (1992),  suggests  that  content  regulation  of  speech  --  even  in  the  context  of 
 speech  thought  to  be  otherwise  unprotected  --  can  still  invoke  strict  scrutiny.  Specifically,  if  the  government  restricts  speech  not  for  reasons  related  to  the  nature  of  the  speech  but  in  order  to  impose  special  restrictions  on 
 "those  speakers  who  express  views  on  disfavored  subjects,"  strict  scrutiny  applies  Id.  at  391;  see  also  id..  at  388-  89  (suggesting  that  regulation  of  advertising  would  fall  within  the  rule  of  RAV  in  certain  circumstances);  44 
 Liquormart  v.  Rhode  Island,  515  U.  S.  at  512  n.  20  (noting  that  RAV  held  that  "although  the  government  had  the  power  to  prescribe  an  entire  category  of  speech,  such  as  obscenity  or  fighting  words,  it  could  not  limit  the  scope  of 
 its  ban  to  obscene  or  fighting  words  that  expressed  a  point  of  view  with  which  the  government  disagrees").  Here,  the  Commission  has  chosen  to  regulate  as  "misleading"  only  one  subcategory  of  commercial  speech  on  carriers'  bills 
 --  that  relating  to  universal  service  charges  which  suggests  the  charges  are  federally  required  --  thus  limiting  the  scope  of  its  ban  to  those  who  express  a  point  of  view  about  the  nature  of  the  charges  with  which  the  Commission 
 disagrees. 
 These  rules  also  might  be  thought  to  impose  a  prior  restraint  on  the  speech  of  telephone  companies.  See  Bantam  Books,  Inc.  v.  Sullivan,  372  U.  S.  58,  70  (1963).  Through  this  on-  going  rulemaking,  companies  must 
 collectively  "pre-  screen"  and  vet  their  selection  of  line  item  descriptions  with  this  agency,  and  those  selections  will  ultimately  be  approved  or  rejected  by  the  agency.  In  the  D.  C.  Circuit,  the  applicability  of  prior  restraint  doctrine  to 
 commercial  speech  is  an  open  question,  see  Pearson  v.  Shalala,  164  F.  3d  at  660,  and  it  clearly  applies  to  core  speech. 


 In  addition,  these  regulations  could  be  void  for  overbreadth.  See  generally  Bigelow  v.  Virginia,  421  U.  S.  809  (1975).  Because  the  Commission  has  chosen  to  restrict  speech  to  the  descriptions  on  its  final  list,  it  has  by 
 negative  implication  prohibited  an  entire  class  of  descriptions  that,  while  not  on  the  approved  list,  are  nonetheless  truthful  and  non-  misleading. 


 Finally,  the  regulations  could  be  unconstitutionally  vague.  See  NEA  v.  Finley,  118  S.  Ct.  2168,  2179  (1998)  ("  The  First  and  Fifth  Amendments  protect  speakers  from  arbitrary  and  discriminatory  enforcement  of  vague 
 standards.")  (citing  NAACP  v.  Button,  371  U.  S.  415,  432-  433  ).  The  standard  for  speech  prohibited  as  "misleading"  is  speech  that  "state[  s]  or  impl[  ies]  that  the  carrier  has  no  choice  regarding  whether  or  not  such  a  charge  must  be 
 included  on  the  bill  or  the  amount  of  the  charge."  Supra  at  para.  56.  Needless  to  say,  this  standard  is  subjective,  undefined,  and  vague,  making  it  very  difficult  for  regulated  entities  to  know  ex  ante  how  they  can  safely  describe 
 the  charges. 
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