[Federal Register Volume 69, Number 199 (Friday, October 15, 2004)]
[Proposed Rules]
[Pages 61184-61193]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-23192]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CC Docket No. 98-170; CG Docket No; 04-244; FCC 04-162]


Policies and Rules Governing Interstate Pay-Per-Call and Other 
Information Services Pursuant to the Telecommunications Act of 1996; 
Truth-in-Billing and Billing Format

AGENCY: Federal Communications Commission.

ACTION: Proposed rules.

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SUMMARY: In this document, the Commission seeks comment on how best to 
protect consumers and foster legitimate businesses that offer audiotext 
information services, including those that use 900 numbers and toll-
free numbers.

DATES: Comments are due on or before November 15, 2004 and reply 
comments are due on or before November 29, 2004. Written comments on 
the Paperwork Reduction Act (PRA) proposed information collection 
requirements must be submitted by the public, Office of Management and 
Budget (OMB), and other interested parties on or before December 14, 
2004.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554. In addition to filing comments with the 
Secretary, a copy of any comments on the Paperwork Reduction Act (PRA) 
information collection requirements contained herein should be 
submitted to Judith B. Herman, Federal Communications Commission, Room 
1-C804, 445 12th Street, SW., Washington, DC 20554, or via the Internet 
to <a href="/cdn-cgi/l/email-protection#bdf7c8d9d4c9d590ff93f5d8cfd0dcd3fddbdede93dad2cb"><span class="__cf_email__" data-cfemail="4a003f2e233e22670864022f38272b240a2c2929642d253c">[email protected]</span></a>, and to Kristy L. LaLonde, OMB Desk Officer, 
Room 10234 NEOB, 725 17th Street, NW., Washington, DC 20503, via the 
Internet to Kristy--L. <a href="/cdn-cgi/l/email-protection#e2ae83ae8d8c8687a28d8f80cc878d92cc858d94"><span class="__cf_email__" data-cfemail="5915381536373d3c1936343b773c3629773e362f">[email protected]</span></a>, or via fax at 202-395-5167.

FOR FURTHER INFORMATION CONTACT: Ruth Yodaiken, of the Consumer & 
Government Affairs Bureau at (202) 418-2512 (voice), or e-mail 
<a href="/cdn-cgi/l/email-protection#b8cacdccd096c1d7dcd9d1d3ddd6f8dedbdb96dfd7ce"><span class="__cf_email__" data-cfemail="b7c5c2c3df99ced8d3d6dedcd2d9f7d1d4d499d0d8c1">[email protected]</span></a>. For additional information concerning the PRA 
information collection requirements contained in this document, contact 
Judith B. Herman at (202) 418-0214, or via the Internet at <a href="/cdn-cgi/l/email-protection#2a605f4e435e42076804624f58474b446a4c4949044d455c"><span class="__cf_email__" data-cfemail="400a35242934286d026e0825322d212e002623236e272f36">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (NPRM), adopted July 1, 2004, and released July 
16, 2004. This Notice of Proposed Rulemaking (NPRM), Policies and Rules 
Governing Interstate Pay-Per-Call and Other Information Services, and 
Toll-free Number Usage; Truth-in-Billing and Billing Format, CC Docket 
No. 98-170, CG Docket No. 04-244; FCC 04-162, contains proposed 
information collection requirements. It will be submitted to the Office 
of Management and Budget (OMB) for review under the Paperwork Reduction 
Act (PRA). OMB, the general public, and other federal agencies are 
invited to comment on the proposed information collection(s) contained 
in these proceedings. On July 16, 2004, the Commission also released a 
Memorandum Opinion and Order (MO&O), Policies and Rules Governing 
Interstate Pay-Per-Call and Other Information Services Pursuant to the 
Telecommunications Act of 1996; Policies and Rules Implementing the 
Telephone Disclosure and Dispute Resolution Act, Florida Public Service 
Commission Petition to Initiate Rulemaking to Adopt Additional 
Safeguards; Application for Review of Advisory Ruling Regarding 
Directly Dialed Calls to International Information Services, CC Docket 
Nos. 96-146 and 98-170, RM-8783, ENF-95-20; FCC 04-162. The full text 
of this document is available on the Commission's Web site Electronic 
Comment Filing System and for public inspection during regular business 
hours in the FCC Reference Center, Room CY-A257, 445 12th Street, SW., 
Washington, DC 20554. To request materials in accessible formats for 
people with disabilities (Braille, large print, electronic files, audio 
format), send an e-mail to <a href="/cdn-cgi/l/email-protection#2f494c4c1a1f1b6f494c4c01484059"><span class="__cf_email__" data-cfemail="80e6e3e3b5b0b4c0e6e3e3aee7eff6">[email protected]</span></a>, or call the Consumer & 
Governmental Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 
(TTY). This NPRM can also be downloaded in Word and Portable Document 
Format (PDF) at http://www.fcc.gov/cgb/policy/paypercall.html.
    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.

[[Page 61185]]

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 <a href="/cdn-cgi/l/email-protection#7f1a1c190c3f191c1c51181009"><span class="__cf_email__" data-cfemail="9afff9fce9dafcf9f9b4fdf5ec">[email protected]</span></a>, 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. 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 appears in the caption of this proceeding, commenters must 
submit two additional copies for each additional docket or rulemaking 
number. Parties who choose to file comments on billing issues, please 
reference both CG Docket No. 04-244 and CC Docket No. 98-170. Parties 
who choose to file comments on any other aspect of Policies and Rules 
Governing Interstate Pay-Per-Call and Other Information Services, and 
Toll-free Number Usage, should reference only CG Docket No. 04-244. 
Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Services 
mail (although we continue to experience delays in receiving U.S. 
Postal Service mail). The Commission's contractor, Natek, Inc., will 
receive hand-delivered or messenger-delivered paper filings for the 
Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, 
Washington, DC 20002. The filing hours at this location are 8 a.m. to 7 
p.m. All hand deliveries must be held together with rubber bands or 
fasteners. Any envelopes must be disposed of before entering the 
building. Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743. U.S. Postal Service first-class mail, 
Express Mail, and Priority Mail should be addressed to 445 12th Street, 
SW., Washington, DC 20554. All filings must be addressed to the 
Commission's Secretary, Marlene H. Dortch, Office of the Secretary, 
Federal Communications Commission, 445 12th Street, SW., Room TW-B204, 
Washington, DC 20554. Parties who choose to file paper comments also 
should send four paper copies of their filings to Kelli Farmer, Federal 
Communications Commission, Room 4-C734, 445 12th Street, SW., 
Washington, DC 20554.
    One copy of each filing must be sent to the Commission's copy 
contractor, Best Copy and Printing, Inc. (BCPI), by mail at Portals II, 
445 12th Street, SW., Room CY-B402, Washington, DC 20554; by e-mail at 
<a href="/cdn-cgi/l/email-protection#5f191c1c1f3d3c2f36283a3d713c3032"><span class="__cf_email__" data-cfemail="c98f8a8a89abaab9a0beacabe7aaa6a4">[email protected]</span></a>; by facsimile at (202) 488-5563; or by telephone at 
(202) 488-5300.

Initial Paperwork Reduction Act of 1995 Analysis

    This document contains proposed information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collections 
requirements contained in this document, as required by the Paperwork 
Reduction Act (PRA) of 1995, Public Law 104-13. Public and agency 
comments are due December 14, 2004. 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. In addition, pursuant to the 
Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4), we seek specific comment on how we might further 
reduce the information collection burden for small business concerns 
with fewer than 25 employees.

    OMB Control Number: 3060-0748.
    Title: Section 64.1504, Disclosure Requirements For Information 
Services Provided Through Toll-Free Numbers.
    Form Number: N/A.
    Type of Review: Revision of currently approved collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: 6,500.
    Estimated Time per Response: 2-5 hours.
    Frequency of Responses: Occasionally; third party disclosure.
    Total Annual Burden: 13,000-32,500 hours approximately.
    Total Annual Cost: None.
    Privacy Act Impact Assessement: No impact(s).
    Needs and Uses: The item proposes to reexamine FCC rules in this 
area to ensure that consumer protections are adequate and are not being 
circumvented. The item seeks comment on a number of issues relating 
consumer protections and the state of the existing 900-number regime, 
toll-free numbers, and audiotext information services accessed through 
dialing methods other than 900 numbers. The Commission seeks comment on 
whether to revise certain recordkeeping requirements to allow 
recordings of customer's oral verification as evidence that charges 
should not be forgiven. We ask if we need to modify our existing rules 
to comport with the E-Sign Act which should ease any existing burdens. 
The item proposes to clarify that all audiotext information services, 
must either have presubscription agreements or use charge cards for 
billing. We note that parties are already required to garner 
authorization for such calls. These measures are aimed at preventing 
circumvention of our rules. We believe that any additional 
recordkeeping burden as a result of these rules would be minimal for 
most businesses. We estimate that this requirement will account for an 
additional 7 hours of recordkeeping burden per company, or an 
additional 10,500 hours.

    OMB Control Number: 3060-0752
    Title: Section 64.1510, Billing Disclosure Requirements for Pay-
Per-Call and Other Information Services.
    Form No.: N/A
    Type of Review: Revision of currently approved collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: 1,946.
    Estimated Time per Response: 10 hours.
    Frequency of Response: Annual reporting requirement; Third party 
disclosure.
    Total Annual Burden: 19,460 hours.
    Total Annual Costs: None.
    Privacy Act Impact Assessments: No impact(s).
    Needs and Uses: The item proposes to reexamine FCC rules in this 
area to ensure that consumer disclosures are adequate. The item also 
seeks comment on a proposal to change the display of toll-free numbers 
on telephone bills to clearly indicate the parties charging for 
information services obtained through toll-free numbers.

Synopsis

1. Toll-free Numbers

    The Commission's rules, which implement the statute virtually 
verbatim, have detailed criteria that must be met in the limited 
circumstances under which calls

[[Page 61186]]

involving toll-free numbers can be used for purchases of goods and 
services, including audiotext information services. Our rules and the 
statute already require common carriers, including small carriers, to 
use contracts or tariffs to prohibit their customers from using 800 
numbers in ways that are thought to leave consumers without the benefit 
of protections against fraud. For example, carriers must prohibit the 
use of 800 numbers, or any other numbers advertised or widely 
understood to be toll-free, in a way that the calling party is charged 
for information, with limited exception. There are exceptions for 
charges where there are presubscription agreements or use of certain 
credit and charge cards. The only way to have information charges that 
appear on a consumer's phone bill is through a presubscription 
agreement which in most cases must be in writing, include specific 
disclosures, and use personal identification numbers for access to the 
service. However, despite these protections, the Commission continues 
to receive complaints in this area. In the first six months of 2004, 
the Commission received close to 5,000 complaints that referenced toll-
free numbers. We are interested in finding out why, with these 
protections, there are still complaints in this area. For example, are 
there many problems for consumers when charge cards are used for 
payment? (See 47 U.S.C. 228(c)(9); 47 CFR 64.1504(c)(2).) Do more 
problems occur, for example, when the written agreement does not 
require the use of a personal identification number? See 47 U.S.C. 
228(c)(8)(C) and (D); 47 CFR 64.1504(f)(1) We seek comment on possible 
solutions.
a. Protection for Line Subscribers as Well as Callers
    Section 228 and our rules governing toll-free calls explicitly 
protect ``the calling party'' from being charged for information 
conveyed during the call unless meeting the criteria discussed above. 
(See 47 U.S.C. 228(c)(7)(C) and (c)(8)-(9); See also 47 CFR 64.1504.) 
In the 1996 Order & NPRM, the Commission discussed the possibility of 
extending the toll-free number protections that apply to the ``calling 
party,'' so that they also apply to the ``subscriber to the originating 
line.'' (1996 Order & NPRM, 11 FCC Rcd at 14753, para. 44. The calling 
party could be someone other than the subscriber, for example, a 
visitor to the subscriber's home.) We believe this proposal is still 
valid today. For directly-dialed toll calls placed without a calling 
card, it is the subscriber--not necessarily the calling party--who is 
assessed charges for calls placed over that line. It would not seem 
appropriate for an individual calling a toll-free number to be 
protected from incurring charges without extending the same protection 
to the individual or entity billed for the calls. We seek comment on 
whether we should amend Sec.  64.1504 of our rules explicitly to 
protect the subscriber as well from the practices that Congress has 
chosen to prohibit. Would such an amendment help to protect small 
businesses from calls made by employees?
b. Use of Number Identification for Billing Through Toll-Free Numbers
    Section 228(c)(7)(A) of the 1996 Act prohibits ``the calling party 
being assessed, by virtue of completing the call [to a toll-free 
number], a charge for the call.'' (47 U.S.C. 228(c)(7).) In the 1996 
Order & NPRM, the Commission adopted a rule that mirrors that portion 
of the Sec.  228 and also prohibits such conduct. (47 CFR 64.1504(c).) 
In order to assess charges for directly dialed toll calls, common 
carriers identify the telephone line used to originate a toll call and 
assess charges to the subscriber to that line. The Commission generally 
has held telephone subscribers responsible for toll charges resulting 
from unauthorized use of their telephone lines. However, in the past, 
the Commission has received complaints that parties were using such 
information to bill callers for services from calls made to toll-free 
numbers. In the 1996 Order & NPRM, the Commission also tentatively 
concluded that a carrier's billing of calls dialed to 800 or other 
toll-free numbers on the basis of one such technology, Automatic Number 
Identification (ANI), amounted to assessing charges on the basis of 
completion of the call, and therefore violated section 228(c)(7)(A) of 
the Act, unless the call involved use of telecommunications devices for 
the deaf. (The term ``ANI'' refers to the delivery of the calling 
party's billing number by a local exchange carrier to any 
interconnecting carrier for billing or routing purposes, and to the 
subsequent delivery to end users. See 47 CFR 64.1600(b). See also 1996 
Order & NPRM, 11 FCC Rcd at 14754, para. 45. Telecommunications devices 
for the deaf utilize ANI to identify the telephone subscriber to be 
billed. The Commission also made a tentative conclusion that ANI-based 
billing also violates 201(b) in the 1996 Order & NPRM. See 1996 Order & 
NPRM, 11 FCC Rcd at 14754, para. 45; See also 47 U.S.C. 228(c)(7), 47 
CFR 64.1504(c), and 47 U.S.C. 201(b). Section 201(b) requires that all 
charges and practices for and in connection with any common carrier 
communications services be just and reasonable) At that time, 
commenters generally agreed that a carrier's billing of toll-free calls 
on the basis of ANI violated the statute. In the interests of 
collecting a more complete record to include newer technology, we now 
seek comment on whether we should specifically prohibit billing calls 
dialed to 800 or other toll-free numbers on the basis of not just ANI, 
but equivalent information, automatically provided calling number 
identification. (See, e.g., 47 CFR 64.1600(d) (charge number--conveying 
similar information in a System 7 environment).)

2. Audiotext Information Services, Including Pay-Per-Call Services

a. Consumer Protection in General
    The Commission's rules governing pay-per-call services are meant to 
be a framework of consumer protections for these audiotext information 
services. The rules require, first, that consumers are given 
appropriate information, such as pricing, so they can make informed 
decisions about services. (The Commission rules require carriers 
themselves to disclose information, and/or to require disclosure 
through contract or tariff. See 47 CFR 64.1502, 1504, and 1509. The 
rules require compliance with Titles II and III of TDDRA, and the FTC's 
implementing rules. See 16 CFR 308.5 (FTC's rules relating to pay-per-
call).) Second, consumers are meant to be able to choose to block 
unwanted access to the pay-per-call services, for free or at a 
reasonable cost. (47 U.S.C. 228(c)(5). See also 47 CFR 64.1508.) And 
third, consumers are supposed to be protected from losing local or 
long-distance services for nonpayment of charges for pay-per-call 
services. (47 U.S.C. 228(c)(4). See also 47 CFR 64.1507.) However, we 
are concerned that as audiotext information services have migrated 
increasingly outside the pay-per-call setting, consumers, including 
small business consumers, have lost some of these basic protections. 
Consumer disclosure requirements for audiotext information services 
only apply to services over 900 numbers, and, as above, some calls over 
toll-free numbers. Similarly, alternative dialing routes circumvent 
subscriber blocking, allowing even children to obtain access to 
audiotext information services. Additionally, consumers' calls are 
sometimes rerouted without their authorization through specialized 
long-distance carriers designed to accumulate high rates for what are 
advertised as free information services. Under those conditions, 
consumers can end up being

[[Page 61187]]

disconnected for what are essentially services that arguably should be 
covered by pay-per-call protections. In this rulemaking we explore 
several of these areas, and seek comment on the best way to address 
concerns of consumers, without hindering legitimate businesses, 
including small and new businesses. One such example of an item outside 
the standard pay-per-call application is a phenomena known informally 
as ``modem hijacking.'' The Commission has received complaints about 
local calls which are redirected without the caller's authorization 
through software programs, which disconnects Internet users' calls and 
dial international numbers often through carriers other than those 
chosen by subscribers for their long-distance calls. Sometimes there is 
no way to disconnect the call other than to unplug the telephone line. 
Furthermore, the placement of a call to an international telephone 
number in situations like this does not necessarily mean it connects 
through the country to which it is assigned.
    Although the FTC has addressed some cases in this area, we seek 
comment on whether additional actions are needed from the FCC. (See, 
e.g., FTC v. BTV Industries, Rik Covell, Adam Lewis, National 
Communications Team, Inc., LO/AD Communications Corp., and Nicholas 
Loader, CV-S-02-0437-LHR-PAL, Complaint, and Temporary Restraining 
Order (D Nev. 2002) (alleging defendant sent e-mail messages claiming 
that consumers had won a prize, and when consumers responded, routing 
the calls to an adult Internet site via a 900-number modem connection 
generating high per-minute rates). In that case, the FTC alleged that 
the defendant's practices were deceptive and misleading by, among other 
things, leading consumers to believe that the connection to the web 
site was toll-free. See, also, FTC v. Verity Int'l, Ltd., 194 F.Supp.2d 
270, 276 (S.D.N.Y. 2002) (FCC supported the FTC action in a friend of 
the court brief).) We invite commenters to offer specific proposals 
consistent with our section 228 authority. We have on a case-by-case 
basis looked at some parameters of using 201(b) to review certain 
relationships between carriers and information providers in chat-line 
cases. (See, e.g., Beehive v. AT&T, 17 FCC Rcd 11641 (2002); AT&T Corp. 
v. Jefferson Telephone Co., Memorandum Opinion and Order, 16 FCC Rcd 
16130 (2001) (Jefferson).) We seek comment on the broader policy of 
what factors and concerns we should take into account in making 
decisions regarding the broad practices and conduct in this general 
area, including whether we should consider revoking carriers' section 
214 certification for such conduct. (See 47 U.S.C. 214.) We seek 
comment on whether consumers should be given protections to allow call 
disconnection.
b. The 900 Number Regime
    Section 228 also requires the Commission to identify procedures 
that common carriers and pay-per-call providers, including small 
carriers and providers, can use to protect against nonpayment of 
legitimate charges. (47 U.S.C. 228(b)(4).) Pay-per-call providers have 
recently commented that audiotext information service providers have 
moved outside the 900 number regime because it has become a difficult 
environment in which to operate. In addition, AT&T Corp. noted that 
pay-per-call providers may avoid federal regulation by using revenue 
sharing agreements and instant credit to mask services that otherwise 
would be regulated as pay-per-call.
    The use of 900 numbers has dropped dramatically in the past five 
years. For example, the number of assigned 900 numbers, which peaked in 
1999 with 447 distinct 900 NXX codes, had dropped to 206 by the end of 
2002. Many of those numbers are not actually used by end users. Many 
carriers decline to provide transport or bill for 900 numbers. Further, 
some pay-per-call providers claimed that carriers forgive disputed pay-
per-call charges repeatedly for the same subscribers without 
instituting 900 number blocking in those cases. One participant 
expressed concern that the health of the 900 number rules, if 
applicable, is crucial to market and consumer confidence. Clearly the 
Commission does not want to direct pay-per-call providers to a system 
that does not function. We seek comment on what steps can be taken to 
ensure the 900 number regime functions properly.
    One commenter noted that a practice used in the United Kingdom 
requiring pay-per-call providers to record the customer's voice greatly 
reduced disputes over charges. We seek comment on whether it would be 
appropriate to allow carriers to accept recordings of customer's oral 
verification that they understand and agree to the charges as evidence 
that charges should not be forgiven. We seek comment from pay-per-call 
providers on whether such items would be necessary.
c. Presubscription or Comparable Arrangement
    As noted previously, the Commission requires services meeting the 
pay-per-call definition to be accessed only through 900 numbers, and 
the only ways that audiotext information services fall outside the pay-
per-call definition, and therefore the requirement that they be offered 
only over 900 numbers, are (1) by being directory services as described 
in the statute, or (2) to have charges assessed only after there is a 
``presubscription or comparable agreement.'' (47 U.S.C. 228(i) and 
(b)(5).) In the 1996 Order & NPRM, the Commission sought comment on 
refining the definition of presubscription and comparable agreement so 
that it is clear what criteria must be met for all audiotext 
information services other than directory services to be offered over 
numbers outside of the 900 prefixes, including those services using 
toll-free numbers. Rather than having the Commission designate all 
prefixes as pay-per-call prefixes to ensure protection for consumers, 
the Commission proposed to make clear that to operate outside of 900 
numbers, all audiotext information services (other than directory 
services) must either have presubscription agreements executed in 
writing or, alternatively, require that payments be made through direct 
remittance, prepaid account, or debit, credit, charge or calling card. 
For example, this proposal would apply such protections to 500 numbers, 
700 numbers, plain old telephone service and international numbers when 
used to provide audiotext information services.
    We again seek comment on the usefulness and practicality of such a 
proposal. In particular, we ask whether this proposal would be adequate 
to balance the need to protect consumers, but allow businesses to 
develop. In particular, how would this proposal effect small 
businesses? Are small businesses already keeping such records? In 
addition, we seek comment on whether there is still a need for such 
changes in this area given developments in electronic commerce and 
related laws, and the now-common use of third-party verifications in 
telephone transactions.
    We also seek comment on whether we need to modify our existing and 
proposed rules given our obligations under the Electronic Signatures in 
Global and National Commerce Act (E-Sign Act). (Electronic Signatures 
in Global and National Commerce Act, S. 761, 106th Cong., 2d Sess. 
(signed into law June 30, 2000).) Under the E-Sign Act, a contract or 
business transaction cannot be denied validity or enforceability solely 
because the contract or transaction is not in writing, so long as the 
contract or transaction is a properly authenticated electronic

[[Page 61188]]

record or has been affirmed by an electronic signature. The E-Sign Act 
provides a specific framework for the use of electronic records and 
signatures and places limits on the interpretation authority of federal 
and state regulatory agencies with regard to this framework. We seek 
comment on how we might best adjust our current and proposed 
requirements for presubscription or comparable agreements to best 
comply with the E-Sign Act.

3. Billing

    Section 228 and our rules already mandate certain billing practices 
for pay-per-call services and 800 numbers billed via the telephone 
bill. (See 47 U.S.C. 228(c)(8)(B) and (d)(4); See also 47 CFR 64.1504, 
1509 and 1510.) Telephone billing of subscribers for any pay-per-call 
services must already display any such charges ``in a part of the 
subscriber's bill that is identified as not being related to local and 
long distance telephone charges,'' and, at a minimum, describe the type 
of service, the amount of the charge, and the date, time, and duration 
of the call. There must also be a clearly-identified toll-free number 
established for customers to call with any questions. 47 U.S.C. 
228(d)(4); See also 47 CFR 64.1509(b) and 47 CFR 64.1510(2). For toll-
free numbers used to bill items on a telephone bill, the number called 
must be listed clearly with a disclaimer in prominent type that neither 
local nor long distance service could be disconnected for ``failure to 
pay disputed charges for information services.'' In addition, the 
Commission has developed rules and guidelines in the Truth-in-Billing 
proceeding to ensure that all telephone billing is readily discernable 
to consumers. (See 47 CFR 64.2400-2401; see also Truth-in-Billing and 
Billing Format, CC Docket No. 98-170, First Report and Order and 
Further Notice of Proposed Rule Making, 14 FCC Rcd 7492 (1999) (Truth-
in-Billing Order)). In general, charges must be accompanied by ``a 
brief, clear, non-misleading, plain language description of the service 
or services rendered'' that allows consumers to ``accurately assess 
that the services for which they are billed correspond to those that 
they requested and received,'' and that the costs ``conform to their 
understanding of the prices charged.'' (47 CFR 64.2401(b). See also 
Truth-in-Billing Order.) The Truth-in-Billing Order requires that 
telephone bills highlight changes in or additions of new providers, but 
non-recurring pay-per-call services are specifically exempt from that 
requirement. (Truth-in-Billing and Billing Format, Order on 
Reconsideration, 15 FCC Rcd 6023, at 6025, para. 5 (2000) (Truth-in-
Billing Reconsideration.))
    We seek comment on whether our existing rules governing billing 
specifically for pay-per-call services and those for charges billed 
through toll-free numbers, in combination with our Truth-in-Billing 
rules and guidelines, are sufficient to address any current billing 
concerns. (We note that the Commission's billing rules specifically do 
not preempt states from adopting or enforcing their own consistent 
rules. 47 CFR 64.2400(b). For example, Florida has adopted a rule 
specifically aimed at pay-per-call problems. See Policies and Rules 
Implementing the Telephone Disclosure and Dispute Resolution Act, 
Florida Public Service Commission Notice of Withdrawal of Petition to 
Initiate Rulemaking, filed January 26, 2004.) We seek comment 
specifically on whether we should adopt a rule stating that charges for 
presubscribed audiotext information services accessed through toll-free 
numbers must be displayed separately from local and long-distance 
telephone service. How would such a rule affect small carriers?

4. Revenue-Sharing Arrangements

    The definition of pay-per-call services found in Sec.  228 rests on 
the requirement that such calls are only those calls to audiotext 
information services for which the caller pays a per-call or per-time-
interval charge greater than or in addition to the ``charge for 
transmission of the call.'' Some businesses have used revenue-sharing 
arrangements to offer for-profit audiotext information services without 
pay-per-call regulation. The classic scenario is when an audiotext 
information service provider does not charge callers for the service 
outright, but instead receives a commission from a common carrier for 
the telephone traffic, which might be charged at a high rate.
    In the 1996 Order & NPRM, the Commission sought to address these 
types of evasions of consumer protections. The Commission tentatively 
concluded that certain revenue-sharing arrangements were in reality 
charging for more than just transmission of the call, even if the 
caller was not billed separately for the audiotext information service. 
(1996 Order & NPRM at 14756 para. 48. The Commission based its 
tentative conclusion on its authority under Sec.  154(i), and addressed 
circumvention of section 228 through the language related to the cost 
of transmission.) Specifically, the Commission tentatively concluded 
that any form of remuneration between a carrier and audiotext 
information services provider constituted per se evidence that the 
charge levied actually exceeds the charge for the transmission.
    Accordingly, under this tentative conclusion, interstate services 
provided through such an arrangement would fit within the pay-per-call 
definition and, thus, be required to be offered exclusively through 900 
numbers. The 1996 Order & NPRM also notes a staff letter which 
discussed several hypothetical scenarios in which revenue-sharing 
arrangements were used essentially to mask audiotext information 
services from pay-per-call regulation. In the Marlowe Letter, the 
staff's opinion was that such scenarios would violate both sectiion 228 
and section 201(b). (Letter from John Muleta, Chief of the Common 
Carrier Enforcement Bureau at that time, to Ronald Marlowe, 10 FCC Rcd 
10945, DA 95-1905 (September 1, 1995) (Marlowe Letter). See 47 U.S.C. 
201(b). Section 201(b) requires all charges and practices for and in 
connection with any common carrier communications services be just and 
reasonable.)
    In 2001, the Commission determined that the existence of a revenue-
sharing arrangement between a common carrier and a chat-line service 
alone did not demonstrate that a carrier's conduct was unjust and 
unreasonable under section 201(b). (Jefferson., 16 FCC Rcd at 16136, 
para. 13. (2001) (overruling Marlowe to the extent that it was not 
consistent with the conclusions in the Order). See also Beehive; 
Jefferson; AT&T Corp. v. Frontier Communications of Mt. Pulaski, Inc., 
17 FCC Rcd 4041 (2002) (follows Jefferson), AT&T v. Atlas Telephone Co. 
and Total Telecommunications Services, Inc., 16 FCC Rcd 5726 (2001), 
aff'd in part and remanded sub nom, AT&T Corp. v. F.C.C., 317 F.3d 227 
(DC Cir. 2003); dismissed, Atlas Telephone Co. v. AT&T Corp., File No. 
E-97-03, Order, 18 FCC Rcd 11533.) Although the Commission noted in 
Jefferson that it was not addressing the application of section 228 to 
such a situation, the decision calls into question our basis for our 
prior tentative conclusion in the 1996 Order & NPRM. (Jefferson, 16 FCC 
Rcd at 16133 n.18.) Thus, we no longer reach that tentative conclusion 
here. Instead, we invite commenters, including small carriers and small 
audiotext information service providers, to address the issue of 
revenue-sharing arrangements in light of the Jefferson decision. 
Parties should discuss whether it is possible or appropriate to find 
that any revenue-sharing arrangements do not comply with section 228 
even if such arrangements would not violate 201(b).

[[Page 61189]]

5. New and Evolving Services

a. Definition of Exempted Directory Services
    Section 228 exempts ``directory services'' from the definition of 
pay-per-call. In the TDDRA R&O implementing section 228, commenters 
asked the Commission to interpret the definition of ``directory 
services'' to include only ``basic'' directory services. The Commission 
noted that a common carrier also operating as a provider of audiotext 
information services ``cannot shield its information services from pay-
per-call regulation by offering them through a directory services 
number.'' In 2003, some commenters stated that ambiguities in this area 
persist. They asked that the Commission ``clarify'' that enhanced 
directory services were exempt from pay-per-call.
    Examples of such services mentioned in the comments to CC Docket 
No. 96-146 include such things as a service that allows subscribers to 
access directory listings by category, and then obtain additional 
information about the listing, upload personal contacts into a private 
database, and use a live operator to access their own personal data. 
Another service allows wireless subscribers to store personal address 
books on a network server and have voice-activated access to data with 
news, receive wake-up calls and get travel information ``at no 
additional charge.'' Another proposed service would add more content 
such as information about the weather, and have partnerships with 
businesses to allow for such connections as transferring customers to 
places for ticket purchases.
    In other proceedings, the Commission has already been presented 
with questions about the offering of directory services that are more 
than ``traditional'' operator provision of local telephone numbering. 
In the N11 numbering proceeding, some commenters had argued that Local 
Exchange Carrier (LEC) use of the 411 number should be restricted to 
the provision of ``traditional'' directory services, meaning operator 
provision of local telephone numbers. (The Use of N11 Code and Other 
Abbreviated Dialing Arrangements, CC Docket No. 92-105, First Report 
and Order and Further Notice of Proposed Rulemaking, 12 FCC Rcd 5572, 
5600, para. 48 (N11 First Report and Order).) The Commission declined 
to do so at that time, and instead concluded that a LEC could offer 
enhanced services using a 411 code, or any other N11 code, only if that 
LEC offered access to the code on a reasonable, nondiscriminatory basis 
to competing enhanced services providers. In January 2002, the 
Commission released a Notice of Proposed Rulemaking in a related 
proceeding specifically asking whether allowing enhanced directory 
assistance to be available through presubscribed 411 would be 
consistent with Commission rules regarding pay-per-call and related 
services. (Provision of Directory Listing Information Under the 
Communications Act of 1934, as Amended, CC Docket No. 99-273; The Use 
of N11 Codes and Other Abbreviated Dialing Arrangements, CC Docket No. 
92-105; Administration of the North American Numbering Plan, CC Docket 
No. 92-237, Notice of Proposed Rulemaking, 17 FCC Rcd 1164, 1183, para. 
37 (FCC 01-384) (N11 NPRM).) We seek comment on the narrow question of 
how to further define ``directory services'' that are specifically 
exempt from the consumer protections of pay-per-call, regardless of 
whether any presubscription or comparable agreement exists.
b. Data Services
    At least two commenters in 2003, claimed that data services are 
exempt from regulation under section 228 and another has suggested that 
uncertainty in this area might fluster development of nascent 
industries. However, section 228 has several provisions that allude to 
data services being pay-per-call services. First, section 228(f)(3) 
required the Commission to review the ``extension of regulation under 
[section 228] with respect to persons that provide, for a per-call 
charge, data services that are not pay-per-call services.'' In the 
First TDDRA Order, the Commission noted that the statutory definition 
of pay-per-call includes ``data information services,'' but it did not 
find a need to warrant extension of regulation of section 228 outside 
pay-per-call data services. In addition, section 228(c)(8) provides an 
exception to the criteria for written agreements for ``any purchase of 
goods or of services that are not information services.'' We seek 
comment on whether further clarification is needed on this topic of 
what data services fit within the pay-per-call definition. We seek 
specific comments on items that might be of significant concern for 
consumers and for developing businesses, including small businesses.

Initial Regulatory Flexibility Analysis (IRFA)

    Initial Regulatory Flexibility Analysis (IRFA), as required by the 
Regulatory Flexibility Act of 1980, as amended (RFA), the Commission 
has prepared this present Initial Regulatory Flexibility Analysis 
(IRFA) of the possible significant economic impact on a substantial 
number of small entities by the policies and rules proposed in this 
Notice of Proposed Rulemaking and Memorandum Opinion and Order (NPRM). 
(See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601-612, has been amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA), Public Law Number. 104-121, Title II, 110 Statute 857 
(1996).) Written public comments are requested on this IRFA. Comments 
must be identified as responses to the IRFA and must be filed by the 
deadline for comments on the NPRM provided above in the Comment Filing 
Procedures section paragraph 45. The Commission will send a copy of the 
NPRM, including this IRFA, to the Chief Counsel for Advocacy of the 
Small Business Administration (SBA). In addition, the NPRM and IRFA (or 
summaries thereof) will be published in the Federal Register.

Need for, and Objectives of, the Proposed Rules

    The Commission has rules to afford consumers protection from 
deceptive practices associated with the provision of audiotext 
information services, and the use of toll-free numbers. In 1996, the 
Commission issued a Notice of Proposed Rulemaking (NPRM) proposing 
rules which were intended to address potential circumvention of the 
regulations. Later, in March of 2003, the Commission issued a Public 
Notice seeking to refresh the record in the proceeding. In this NPRM, 
the Commission initiates a new proceeding to review the effectiveness 
of our rules governing pay-per-call services, related audiotext 
information services, and toll-free numbers. The Commission seeks 
comment on the state of the 900-number regime regulating pay-per-call 
services, the effectiveness of consumer protections relating to toll-
free numbers, and to those audiotext information services accessed 
through dialing methods other than 900 numbers. We are interested in 
learning the extent to which consumer protections have been 
circumvented, and what steps we might take to protect consumers, 
including small business consumers, from such practices. In addition, 
we seek comment on changes in technology that warrant re-examination 
and clarification of these rules.

Legal Basis

    The legal basis for any action that may be taken pursuant to this 
NPRM is contained in sections 1-4, 201(b), 228, and 303(r) of the 
Communications Act

[[Page 61190]]

of 1934, as amended, 47 U.S.C. 151-154, 201(b), 228, and 303(r).

Description and Estimate of the Number of Small Entities To Which the 
Proposed Rules Will Apply

    The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules and policies, if adopted. The RFA 
generally defines the term ``small entity'' as having the same meaning 
as the terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' In addition, the term ``small business'' 
has the same meaning as the term ``small business concern'' under the 
Small Business Act. A ``small business concern'' is one which: (1) Is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the 
SBA.
    Small entities potentially affected by the policies and rules 
proposed herein include organizations, governmental jurisdictions, 
providers of audiotext information services, and providers of 
telecommunications and other services, including both wired and 
wireless services, such as operator service providers, prepaid calling 
card providers, and other toll carriers.
    Small Businesses. Nationwide, there are approximately 22.4 million 
small businesses, according to SBA data.
    Small Organizations. A small organization is generally ``any not-
for-profit enterprise which is independently owned and operated and is 
not dominant in its field.'' Nationwide, there are approximately 1.6 
million small organizations. Small Governmental Jurisdictions. The term 
``small governmental jurisdiction'' is defined as ``governments of 
cities, counties, towns, townships, villages, school districts, or 
special districts, with a population of less than fifty thousand.'' As 
of 1997, there were approximately 87,453 government jurisdictions in 
the United States. This number includes 39,044 county governments, 
municipalities, and townships, of which 37,546 have populations of 
fewer than 50,000 and 1,498 have populations of 50,000 or more. Thus, 
we estimate the number of small governmental jurisdictions overall to 
be up to 85,955.
    Providers of audiotext information services. While the Commission's 
rules directly apply to common carriers that transmit and bill 
subscribers for information services, other companies actually 
providing the information services might be indirectly affected. For 
example, audiotext information service providers that have used toll-
free numbers to provide information services will be affected by the 
proposed limitations involving the use of toll-free numbers and 
mandatory written presubscription. These companies may experience an 
adverse economic impact in that they will have to change the manner in 
which they provide services to secure billing.
    The Commission has only limited unverifiable information to predict 
either the total number of audiotext information service providers, or 
the percentage of providers that qualify as small entities. Audiotext 
Information Service providers are not subject to federal licensing or 
reporting requirements. In 1996, staff had been able to obtain from 
industry sources only an informal estimate that the total number of 
these entities operating, which at that time was noted as probably 
somewhere between 10,000 and 20,000 total operating entities. Although 
the Commission asked for comment as to the number of small businesses 
that would have been affected by regulations proposed in this area in 
1996, the Commission received no data in comments. Even assuming that 
this rough estimate is correct, we cannot, with certainty identify what 
portion of such providers might be providing services in a manner that 
would subject them to the proposed regulations governing toll-free 
numbers and presubscription agreements, or predict what portion of all 
such providers are small businesses. We invite parties commenting on 
this IRFA to provide information as to the number of small businesses 
that would be affected by our proposed regulations and to identify 
alternatives that would reduce the burden on these entities while still 
ensuring that consumers are protected adequately.
    All Other Information Services. ``This industry comprises 
establishments primarily engaged in providing other information 
services (except new syndicates and libraries and archives).'' We note 
that, in our Notice, we have described activities such as email, online 
gaming, web browsing, video conferencing, instant messaging, and other, 
similar Internet Protocol-enabled services. The SBA has developed a 
small business size standard for this category; that size standard is 
$6 million or less in average annual receipts. According to United 
States Bureau of the Census (the Census Bureau) data for 1997, there 
were 195 firms in this category that operated for the entire year. Of 
these, 172 had annual receipts of under $5 million, and an additional 
nine firms had receipts of between $5 million and $9,999,999. 
Consequently, we estimate that the majority of these firms are small 
entities that may be affected by our action.
    Providers of Telecommunications and Other Services. We have 
included small incumbent local exchange carriers (LECs) in this present 
RFA analysis. As noted above, a ``small business'' under the RFA is one 
that, inter alia, meets the pertinent small business size standard 
(e.g., a telephone communications business having 1,500 or fewer 
employees), and ``is not dominant in its field of operation.'' The 
SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent LECs are not dominant in their field of operation because any 
such dominance is not ``national'' in scope. We have therefore included 
small incumbent LECs in this RFA analysis, although we emphasize that 
this RFA action has no effect on Commission analyses and determinations 
in other, non-RFA contexts.
    Total Number of Telephone Companies Affected. The Census Bureau 
reports that, at the end of 1997, there were 6,239 firms engaged in 
providing telephone services, as defined therein. This number contains 
a variety of different categories of carriers, including local exchange 
carriers, interexchange carriers, competitive access providers, mobile 
service carriers, operator service providers, pay telephone operators, 
personal communications service (PCS) providers, covered small mobile 
radio (SMR) providers, and resellers. It seems certain that some of 
those 6,239 telephone service firms may not qualify as small entities 
because they are not ``independently owned and operated.'' For example, 
a PCS provider that is affiliated with an interexchange carrier having 
more than 1,500 employees would not meet the definition of a small 
business. It seems reasonable to conclude, therefore, that 6,239 or 
fewer telephone service firms are small entity telephone service firms 
that may be affected by the policies and rules proposed in this NPRM.
    Wired Telecommunications Carriers. The SBA has developed a small 
business size standard for Wired Telecommunications Carriers, which 
consists of all such companies having 1,500 or fewer employees.
    According to Census Bureau data for 1997, there were 2,225 firms in 
this category, total, that operated for the entire year. Of this total, 
2,201 firms had employment of 999 or fewer employees, and an additional 
24 firms had employment of 1,000 employees or more. Thus, under this 
size standard,

[[Page 61191]]

the great majority of firms can be considered small.
    Incumbent LECs. Neither the Commission nor the SBA has developed a 
small business size standard specifically for incumbent LECs. The 
appropriate size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. According to Commission 
data, 1,337 carriers have reported that they are engaged in the 
provision of incumbent local exchange services. Of these 1,337 
carriers, an estimated 1,032 have 1,500 or fewer employees and 305 have 
more than 1,500 employees. Consequently, the Commission estimates that 
most providers of incumbent local exchange service are small businesses 
that may be affected by our proposed policies and actions.
    Competitive LECs, Competitive Access Providers (CAPs), and ``Other 
Local Service Providers.'' Neither the Commission nor the SBA has 
developed a small business size standard specifically for these service 
providers. The appropriate size standard under SBA rules is for the 
category Wired Telecommunications Carriers. Under that size standard, 
such a business is small if it has 1,500 or fewer employees. According 
to Commission data, 609 carriers have reported that they are engaged in 
the provision of either competitive access provider services or 
competitive local exchange carrier services. Of these 609 carriers, an 
estimated 458 have 1,500 or fewer employees and 151 have more than 
1,500 employees. In addition, 35 carriers have reported that they are 
``Other Local Service Providers.'' Of the 35, an estimated 34 have 
1,500 or fewer employees and one has more than 1,500 employees. 
Consequently, the Commission estimates that most providers of 
competitive local exchange service, competitive access providers, and 
``Other Local Service Providers'' are small entities that may be 
affected by our proposed policies and actions.
    Local Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. According to Commission data, 133 carriers have reported 
that they are engaged in the provision of local resale services. Of 
these, an estimated 127 have 1,500 or fewer employees and six have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of local resellers are small entities that may be affected by 
our proposed policies and actions.
    Interexchange Carriers. Neither the Commission nor the SBA has 
developed a small business size standard specifically for providers of 
interexchange services. The appropriate size standard under SBA rules 
is for the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 261 carriers have reported that they are 
engaged in the provision of interexchange service. Of these, an 
estimated 223 have 1,500 or fewer employees and 38 have more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
interexchange carriers are small entities that may be affected by our 
proposed policies and actions.
    Operator Service Provider (OSP). Neither the Commission nor the SBA 
has developed a small business size standard specifically for operator 
service providers. The appropriate size standard under SBA rules is for 
the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 23 carriers have reported that they are 
engaged in the provision of operator services. Of these, an estimated 
22 have 1,500 or fewer employees and one has more than 1,500 employees. 
Consequently, the Commission estimates that the majority of OSPs are 
small entities that may be affected by our proposed policies and 
actions.
    Prepaid Calling Card Providers. Neither the Commission nor the SBA 
has developed a small business size standard specifically for prepaid 
calling card providers. The appropriate size standard under SBA rules 
is for the category Telecommunications Resellers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 37 carriers have reported that they are 
engaged in the provision of prepaid calling cards. Of these, an 
estimated 36 have 1,500 or fewer employees and one has more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
prepaid calling card providers are small entities that may be affected 
by our proposed policies and actions.
    Other Toll Carriers. Neither the Commission nor the SBA has 
developed a size standard for small businesses specifically applicable 
to ``Other Toll Carriers.'' This category includes toll carriers that 
do not fall within the categories of interexchange carriers, OSPs, 
prepaid calling card providers, satellite service carriers, or toll 
resellers. The closest applicable size standard under SBA rules is for 
Wired Telecommunications Carriers. Under that size standard, such a 
business is small if it has 1,500 or fewer employees. According to 
Commission's data, 42 companies reported that their primary 
telecommunications service activity was the provision of payphone 
services. Of these 42 companies, an estimated 37 have 1,500 or fewer 
employees and five have more than 1,500 employees. Consequently, the 
Commission estimates that most ``Other Toll Carriers'' are small 
entities that may be affected by our proposed policies and actions.
    Wireless Service Providers. The SBA has developed a small business 
size standard for wireless firms within the two broad economic census 
categories of Paging and Cellular and Other Wireless 
Telecommunications. Under both SBA categories, a wireless business is 
small if it has 1,500 or fewer employees. For the census category of 
Paging, Census Bureau data for 1997, show that there were 1,320 firms 
in this category, total, that operated for the entire year. Of this 
total, 1,303 firms had employment of 999 or fewer employees, and an 
additional 17 firms had employment of 1,000 employees or more. Thus, 
under this category and associated small business size standard, the 
great majority of firms can be considered small. For the census 
category Cellular and Other Wireless Telecommunications, Census Bureau 
data for 1997, show that there were 977 firms in this category, total, 
that operated for the entire year.
    Of this total, 965 firms had employment of 999 or fewer employees, 
and an additional 12 firms had employment of 1,000 employees or more. 
Thus, under this second category and size standard, the great majority 
of firms can, again, be considered small. Narrowband Personal 
Communications Services. The Commission held an auction for Narrowband 
PCS licenses that commenced on July 25, 1994, and closed on July 29, 
1994. A second auction commenced on October 26, 1994, and closed on 
November 8, 1994. For purposes of the first two Narrowband PCS 
auctions, ``small businesses'' were entities with average gross 
revenues for the prior three calendar years of $40 million or less. 
Through these auctions, the Commission awarded a total of 41 licenses, 
11 of which were obtained by four small businesses. To ensure 
meaningful participation by small business entities in future auctions, 
the

[[Page 61192]]

Commission adopted a two-tiered small business size standard in the 
Narrowband PCS Second Report and Order. A ``small business'' is an 
entity that, together with affiliates and controlling interests, has 
average gross revenues for the three preceding years of not more than 
$40 million. A ``very small business'' is an entity that, together with 
affiliates and controlling interests, has average gross revenues for 
the three preceding years of not more than $15 million. The SBA has 
approved these small business size standards. A third auction commenced 
on October 3, 2001 and closed on October 16, 2001. Here, five bidders 
won 317 (Metropolitan Trading Areas and nationwide) licenses. Three of 
these claimed status as a small or very small entity and won 311 
licenses.
    Common Carrier Paging. The SBA has developed a small business size 
standard for wireless firms within the broad economic census categories 
of Cellular and Other Wireless Telecommunications. Under this SBA 
category, a wireless business is small if it has 1,500 or fewer 
employees. For the census category of Paging, Census Bureau data for 
1997, show that there were 1,320 firms in this category, total, that 
operated for the entire year. Of this total, 1,303 firms had employment 
of 999 or fewer employees, and an additional 17 firms had employment of 
1,000 employees or more. Thus, under this category and associated small 
business size standard, the great majority of firms can be considered 
small.
    In the Paging Second Report and Order, the Commission adopted a 
size standard for ``small businesses'' for purposes of determining 
their eligibility for special provisions such as bidding credits and 
installment payments. A small business is an entity that, together with 
its affiliates and controlling principals, has average gross revenues 
not exceeding $15 million for the preceding three years. The SBA has 
approved this definition. An auction of Metropolitan Economic Area 
(MEA) licenses commenced on February 24, 2000, and closed on March 2, 
2000. Of the 2,499 licenses auctioned, 985 were sold. Fifty-seven 
companies claiming small business status won 440 licenses. An auction 
of MEA and Economic Area (EA) licenses commenced on October 30, 2001, 
and closed on December 5, 2001. Of the 15,514 licenses auctioned, 5,323 
were sold. One hundred thirty-two companies claiming small business 
status purchased 3,724 licenses. A third auction, consisting of 8,874 
licenses in each of 175 EAs and 1,328 licenses in all but three of the 
51 MEAs commenced on May 13, 2003, and closed on May 28, 2003. Seventy-
seven bidders claiming small or very small business status won 2,093 
licenses. Currently, there are approximately 74,000 Common Carrier 
Paging licenses. According to the most recent Trends in Telephone 
Service, 608 private and common carriers reported that they were 
engaged in the provision of either paging or ``other mobile'' services. 
Of these, we estimate that 589 are small, under the SBA-approved small 
business size standard. We estimate that the majority of common carrier 
paging providers would qualify as small entities under the SBA 
definition.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    There are several compliance requirements addressed in this item. 
One, carriers are responsible for assuring that toll-free numbers, when 
they appear on a telephone bill, must appear in a separate section of 
the bill in order to make it easier for consumers to understand charges 
that stem from calls to toll-free numbers. Carriers are already 
required to separate out a variety of calls, e.g. local versus long 
distance; therefore, we do not expect this compliance requirement to be 
particularly burdensome for carriers, even small carriers.
    This is not a new requirement, just a clarification of an existing 
one. Two, in order to operate outside 900 numbers, all audiotext 
information services--not only those using toll-free numbers--must be 
provided pursuant to a written (or the electronic equivalent) 
presubscription agreement or made through payments involving direct 
remittance, prepaid account, or debit, credit, charge, or calling 
cards. These proposed policies and rules are designed to clarify the 
existing requirement that the presubscription or comparable agreement 
be in writing or make use of one of the payment methods discussed 
above. As such, any proposed policy or rule changes do not constitute 
an additional compliance burden.

Steps Taken To Minimize Significant Economic Impact on Small Entities, 
and Significant Alternative Considered

    The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): ``(1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.'' Commenters, in 2003, noted that audiotext service providers 
found the 900 number regime has become a difficult environment in which 
to operate a business. Some businesses complained that charges for 
audiotext information services were dropped from carriers' bills. In 
order to address this concern we are considering allowing carriers to 
accept recordings of customer oral verifications as evidence that 
charges through 900 numbers should not be removed from the telephone 
bill. These verifications would indicate that the customer understood 
and agreed to the 900 number charges. We expect this alternative to 
assist small businesses, both carriers and audiotext information 
service providers, by facilitating billing on a telephone bill as 
opposed to a credit card or other such means. We note in the primary 
item that disputes over such charges were greatly reduced once oral 
verification was implemented in another country.

Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    Federal Trade Commission (FTC) regulations pursuant to the 
Telephone Disclosure and Dispute Resolution Act (TDDRA), prescribe 
federal standards governing some audiotext information service 
providers and all entities, including common carriers, which bill and 
collect for interstate information services. The FTC has noted that the 
expansion of the definition of covered services under its governing 
statutes from Titles II and III of TDDRA, does not have any effect upon 
the main definition of pay-per-call services under Title I of TDDRA, 
codified as section 228. The FTC initiated a proceeding in this area in 
1998, but at this time it has not issued final conclusions.

Ordering Clauses

    Accordingly, pursuant to the authority contained in sections 1-4, 
201(b), 228 and 303(r) of the Communications Act of 1934, as amended, 
47 U.S.C. 151-154, 201(b), 228 and 303(r); and 47 CFR 64.1501-1515 of 
the Commission's rules, this Notice of Proposed Rulemaking is adopted.
    The Commission's Consumer & Governmental Affairs Bureau, Reference

[[Page 61193]]

Information Center, shall send a copy of this Notice of Proposed 
Rulemaking, including the Initial Regulatory Flexibility Analysis, to 
the Chief Counsel for Advocacy of the Small Business Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 04-23192 Filed 10-14-04; 8:45 am]
BILLING CODE 6712-01-P


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