Federal Register / Vol. 62, No. 157 / Thursday, August 14, 1997 / Proposed Rules 43493

not changed by the 1996 SDWA

Amendments.

The current rule sets different

requirements based on the type of

violation and type of system. The 1996

SDWA amendments substantially alter

what is currently in place: (1) SDWA

section 1414(c)(2)(C) requires notice

within 24 hours and sets other new,

more prescriptive notice requirements

for violations with ‘‘Potential to Have

Serious Adverse Health Risks to Human

Health’’; (2) SDWA section 1414(c)(2)(D)

gives EPA more discretion to set less

prescriptive notice requirements for all

other violations, including requiring the

notice in an annual report; and (3)

SDWA section 1414(c)(2)(B) allows the

State to prescribe alternative

notification requirements by rule to the

form and content of the notice,

consistent with the current primacy

requirements. To meet the letter and spirit of the

new statutory provisions, EPA will hold

three or more public stakeholder

meetings prior to drafting the regulation.

This is the first of the scheduled

stakeholder meetings that are planned

over the next several months, to

exchange information on our mutual

experience with the current regulation

and the elements needed in the new

regulation to meet the intent of

Congress. The legislative changes

provide an excellent opportunity to

streamline the existing regulations by

focusing the notices on situations that

have potential to have serious adverse

effects on human health. EPA will also

solicit from the stakeholders existing

public notification programs that work,

and seek to share these experiences

through our rulemaking

communication. The reports from these

meetings will be presented to the public

notification workgroup to define the

issues and to develop options for their

resolution.

Cynthia C. Dougherty,

Director, Office of Ground Water and Drinking

Water.

[FR Doc. 97–21537 Filed 8–13–97; 8:45 am]

BILLING CODE 6560–50–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 64

[CC Docket No. 94–129; FCC 97–248]

Implementation of the Subscriber

Carrier Selection Changes Provisions

of the Telecommunications Act of 1996

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule.

SUMMARY: The Commission adopted a

combined Further Notice of Proposed

Rule Making and Memorandum

Opinion and Order on Reconsideration

which amends the Commission’s rules

and policies governing the unauthorized

switching of subscribers’ primary

interexchange carriers (PICs), an activity

more commonly known as ‘‘slamming.’’

In the Further NPRM, the Commission

proposes specific requirements to

implement Section 258 of the

Telecommunications Act of 1996, which

extends the Commissions PIC-change

verification rules to apply with equal

force to all telecommunications carriers.

The Commission also seeks comment

regarding the liability among carriers

and subscribers when slamming occurs.

The Commission’s objective in seeking

comment in the FNPRM is to identify

and evaluate further safeguards to

protect consumers from unauthorized

switching of their long distance carriers

and to encourage full and fair

competition among telecomunications

carriers in the marketplace.

DATES: Written comments by the public

on the proposed and/or modified

information collections are due

September 15, 1997 and reply

comments on or before September 29,

1997. Written comments must be

submitted by the OMB on the proposed

and/or modified information collections

on or before October 14, 1997.

ADDRESSES: In addition to filing

comments with the Secretary, a copy of

any comments on the information

collections contained herein should be

submitted to Judy Boley, Federal

Communications Commission, Room

234, 1919 M Street, N.W., Washington,

DC 20554, or via the Internet to

jboley@fcc.gov, and to Timothy Fain,

OMB Desk Officer, 10236 NEOB, 725—

17th Street, N.W., Washington, DC

20503 or via the Internet to

fainlt@al.eop.gov.

FOR FURTHER INFORMATION CONTACT:

Cathy Seidel, Enforcement Division,

Common Carrier Bureau, (202) 418–

0960. For additional information

concerning the information collections

contained in this Further NPRM contact

Judy Boley at 202–418–0217, or via the

Internet at jboley@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s Further

NPRM in CC Docket No. 94–129 [FCC

97–248], adopted on July 14, 1997 and

released on July 15, 1997. The full text

of the Further NPRM is available for

inspection and copying during normal

business hours in the FCC Reference

Center, Room 239, 1919 M Street, N.W.,

Washington, D.C. The complete text of

this decision may also be purchased

from the Commission’s duplicating

contractor, International Transcription

Services, 1231 20th Street, N.W.,

Washington, D.C. This Further NPRM

contains proposed or modified

information collections subject to the

Paperwork Reduction Act of 1995

(PRA), Public Law 104–13. It has been

submitted to the Office of Management

and Budget (OMB) for review under

Section 3507(d) of the PRA. OMB, the

general public, and other Federal

agencies are invited to comment on the

proposed or modified information

collections contained in this

proceeding. Paperwork Reduction Act:

This Further NPRM contains either a

proposed or modified information

collection. The Commission, as part of

its continuing effort to reduce

paperwork burdens, invites the general

public and the OMB to comment on the

information collections contained in

this Further NPRM, as required by the

Paperwork Reduction Act of 1995,

Public Law 104–13. Public and agency

comments are due at the same time as

other comments on this Further NPRM;

OMB notification of action is due

Otober 14, 1997.

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.

OMB Approval Number: None.

Title: Implementation of the

Subscriber Carrier Selection Changes

Provisions of the Telecommunications

Act of 1996.

Form No.: N/A.

Type of Review: New collection.

Respondents: Business or other forprofit, including small business.
43494 Federal Register / Vol. 62, No. 157 / Thursday, August 14, 1997 / Proposed Rules

Proposed sec. Number of

resp.

Est. time per

resp.

Tot. annual

burden

Est. costs

per resp.

Sec. 64.1100 .................................................................................................................. 675 1.25 844

Sec. 64.1150 .................................................................................................................. 1800 2 3600

Sec. 64.1170 .................................................................................................................. 1800 3 5400

Needs and Uses: The Commission, in

its effort to protect subscribers from

unauthorized switching of their

preferred carriers, and to implement

Section 258 of the Telecommunications

Act of 1996 pertaining to illegal changes

in subscriber carrier selections, issued

the Further NPRM to propose specific

requirements and seek comments

regarding, inter alia, the liability of (1)

slammed subscribers to carriers, (2)

unauthorized carriers to properly

authorized carriers, and (3) carriers to

slammed subscribers. This information

will be used to revise the Commission’s

rules to reflect its expanded authority to

address unauthorized changes of both

telephone toll and telephone exchange

service by any telecommunications

carrier.

Summary of Further Notice of Proposed

Rule Making

I. Background

1. On July 14, 1997, the Commission

adopted a combined Further Notice of

Proposed Rule Making and

Memorandum Opinion and Order on

Reconsideration in Docket 94–129. The

Commission adopted the Further NPRM

to seek comment on (1) a proposal to

amend the Commission’s rules

regarding verification of orders for long

distance service generated by

telemarketing to apply to all

telecommunications carriers who

submit or execute orders for

telecommunications service; (2) whether

the verification rules should apply to

solicitation of preferred carrier freezes;

(3) whether the ‘‘welcome package’’

verification option described in

§ 64.1100(d) continues to be a viable

and necessary verification alternative;

(4) the costs and benefits associated

with verification of in-bound (or

consumer-initiated) carrier change

requests; (5) liability among carriers and

subscribers when slamming occurs; and,

(6) whether to establish a bright-line

evidentiary standard for determining

whether a subscriber has relied on a

resale carrier’s identity of its

underlying, facilities-based network

provider, hence requiring that the resale

carrier notify the subscriber if the

underlying network provider is

changed.

2. The Commission first established

safeguards to deter slamming when

equal access was implemented in 1985.

By 1992, because the interexchange

market had become more competitive,

the need for additional safeguards to

deter slamming increased. Therefore,

the Commission adopted rules requiring

that all IXCs institute one of four

verification procedures before

submitting a carrier change request

generated through telemarketing, on

behalf of a customer. 7 FCC Rcd 1038

(1992), recon. denied, 8 FCC Rcd 3215

(1993). In 1994, the Commission on its

own motion and in response to

continuing complaints from subscribers

regarding slamming, instituted a rule

making and adopted rules in its 1995

Report and Order, 10 FCC Rcd 9560

(1995), 60 FR 35846 (July 12, 1995),

establishing further anti-slamming

safeguards to deter misleading letters of

agency (LOAs). A LOA is a document

signed by a subscriber which states that

a particular carrier has been selected as

that subscriber’s preferred carrier.

Despite the Commissions anti-slamming

efforts, the number of written slamming

complaints received by the Commission

in 1995 was 11,278, which represents a

six-fold increase over the number of

such complaints received in 1993. That

number has continued to rise; over

16,000 such complaints were received

in 1996. Shortly after the adoption of

the 1995 Report and Order, the

Commission, on its own motion, stayed

its 1995 Report and Order insofar as it

extends the PIC-change verification

requirements set forth in § 64.1100 of

the Commission’s rules to consumerinitiated or in-bound telemarketing

calls. The stay was imposed before the

effective date of the 1995 Report and

Order. The consumer-initiated or inbound telemarketing provision is the

only component of its anti-slamming

rules that the Commission stayed. The

stay of this provision of the 1995 Report

and Order, remains in effect.

II. Discussion

3. The Commission expanded the

above-captioned docket to seek

comment on proposed modifications to

its rules to implement Section 258 of the

Communications Act of 1934, 47 U.S.C.

258, as amended by the

Telecommunications Act of 1996,

Public Law 104–104, 110 Stat. 56 (Act).

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 verification

procedures as the Commission shall

prescribe.’’ The section further provides

that:

[a]ny telecommunications carrier that

violates the verification procedures described

in subsection (a) and that collects charges for

telephone exchange service or telephone toll

service from a subscriber shall be liable to the

carrier previously selected by the subscriber

in an amount equal to all charges paid by

such subscriber after such violation.

The plain language of Section 258

reflects Congressional recognition that

unauthorized changes in subscribers’

carrier selections, or ‘‘slamming,’’ is a

significant consumer problem that

threatens the pro-competitive goals and

policies underlying the Act.

4. By enacting Section 258, Congress

has substantially bolstered the

Commission’s continuing efforts and

ability to deter, punish and, ultimately,

eliminate slamming. The Commission

stated that its verification procedures,

together with the economic

disincentives embodied in Section 258

(whereby unauthorized carriers must

forfeit all charges collected from a

subscriber it has slammed to the

subscriber’s properly authorized carrier)

and the rules proposed in the Further

NPRM, provide a two-pronged approach

to deter slamming. The Commission has

tentatively concluded that its current

rules, with the additions and

modifications described in the Further

NPRM, will best implement the

statutory prohibition against slamming

by any telecommunications carrier,

protect the right of consumers to be free

of deceptive and misleading marketing

practices, and help promote full and fair

competition among telecommunications

carriers in the marketplace by ensuring

that consumers’ choices are honored in

the marketplace.

III. Ex Parte Requirements

5. This Further NPRM is a permit-butdisclose rule making proceeding. Ex

parte presentations are permitted, in

accordance with Commission rules, see

generally 47 CFR 1.1200, 1.1202, 1.1204,

1.1206, provided that they are disclosed

as required.
Federal Register / Vol. 62, No. 157 / Thursday, August 14, 1997 / Proposed Rules 43495

IV. Regulatory Flexibility Analysis

6. As required by the Regulatory

Flexibility Act (RFA), 5 U.S.C. 603, the

Commission has prepared an Initial

Regulatory Flexibility Analysis (IRFA)

of the expected significant economic

impact on small entities by the policies

and rules proposed in the

Implementation of the Subscriber

Carrier Selection Changes Provisions of

the Telecommunications Act of 1996,

Further NPRM. Written public

comments are requested on the IRFA.

Comments must be identified as

responses to the IRFA and must be filed

by the deadlines for comments on the

Further NPRM. The Secretary shall send

a copy of this NPRM to the Chief

Counsel for Advocacy of the Small

Business Administration (SBA) in

accordance with the RFA, 5 U.S.C.

§ 603(a).

i. Need for and Objectives of the

Proposed Rules

7. The Commission, in its effort to

protect subscribers from unauthorized

switching of preferred carriers, and to

implement provisions of the

Telecommunications Act of 1996

pertaining to illegal changes in

subscriber carrier selections, issues the

Further NPRM to propose specific

verification requirements for all carriers

and to seek comments regarding the

liability of (1) slammed subscribers to

carriers, (2) unauthorized carriers to

properly authorized carriers, and (3)

carriers to slammed subscribers.

ii. Legal Basis

8. This Further NPRM is adopted

pursuant to Sections 1, 4(i), 4(j), 201–

205, 258, and 303(r) of the

Communications Act of 1934, as

amended, 47 U.S.C. 151, 154(i), 154(j),

201–205, 258, 303(r).

iii. Description and Number of Small

Entities Which May Be Affected

9. As set forth above, in its specific

efforts to deter unauthorized changes in

subscribers’ preferred carriers, the

Commission is seeking comment on

rules regarding changes in subscriber

carrier selections. Under the Act and

proposed rules, small entities that

violate the Commission’s preferred

carrier change verification rules by

slamming subscribers shall be liable to

the subscriber’s properly authorized

carrier for all charges paid by the

slammed subscriber and for the value of

any premiums to which the subscriber

would have been entitled if the slam

had not occurred.

10. For the purposes of the analysis,

the Commission examined the relevant

definition of ‘‘small entity’’ or ‘‘small

business’’ and applied this definition to

identify those entities that may be

affected by the rules adopted in this

Further NPRM. The RFA defines a

‘‘small business’’ to be the same as a

‘‘small business concern’’ under the

Small Business Act, 15 U.S.C. 632,

unless the Commission has developed

one or more definitions that are

appropriate to its activities. Under the

Small Business Act, a ‘‘small business

concern’’ is one that: (1) Is

independently owned and operated; (2)

is not dominant in its field of operation;

and (3) meets any additional criteria

established by the SBA. Moreover, the

SBA has defined a small business for

Standard Industrial Classification (SIC)

categories 4812 (Radiotelephone

Communications) and 4813 (Telephone

Communications, Except

Radiotelephone) to be small entities

when they have fewer than 1,500

employees.

11. Consistent with prior practice, the

Commission excludes small incumbent

LECs from the definition of ‘‘small

entity’’ and ‘‘small business concerns’’

for the purpose of this IRFA. Because

the small incumbent LECs subject to

these rules are either dominant in their

field of operations or are not

independently owned and operated,

consistent with our prior practice, they

are excluded from the definition of

‘‘small entity’’ and ‘‘small business

concerns.’’ Accordingly, the

Commission’s use of the terms ‘‘small

entities’’ and ‘‘small businesses’’ does

not encompass small incumbent LECs.

Out of an abundance of caution,

however, for regulatory flexibility

analysis purposes, the Commission

considers small incumbent LECs within

this analysis and uses the term ‘‘small

incumbent LECs’’ to refer to any

incumbent LECs that arguably might be

defined by SBA as ‘‘small business

concerns.’’

Telephone Companies (SIC 4813)

12. Total Number of Telephone

Companies Affected. The decisions and

rules adopted by the Commission may

have a significant effect on a substantial

number of small telephone companies

identified by the SBA. The United

States Bureau of the Census (Census

Bureau) reports that, at the end of 1992,

there were 3,497 firms engaged in

providing telephone service, as defined

therein, for at least one year. 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, PCS providers,

covered SMR providers, and resellers. It

seems certain that some of those 3,497

telephone service firms may not qualify

as small entities or small incumbent

LECs 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 fewer than

3,497 telephone service firms are small

entity telephone service firms or small

incumbent LECs that may be affected by

the Further NPRM.

13. Wireline Carriers and Service

Providers. The SBA has developed a

definition of small entities for

telecommunications companies other

than radiotelephone (wireless)

companies (Telephone

Communications, Except

Radiotelephone). The Census Bureau

reports that there were 2,321 such

telephone companies in operation for at

least one year at the end of 1992.

According to the SBA definition, a small

business telephone company other than

a radiotelephone company is one

employing fewer than 1,500 persons. Of

the 2,321 non-radiotelephone

companies listed by the Census Bureau,

2,295 companies (or, all but 26) were

reported to have fewer than 1,000

employees. Thus, at least 2,295 nonradiotelephone companies might qualify

as small incumbent LECs or small

entities based on these employment

statistics. However, because it seems

certain that some of these carriers are

not independently owned and operated,

this figure necessarily overstates the

actual number of non-radiotelephone

companies that would qualify as ‘‘small

business concerns’’ under the SBA

definition. Consequently, the

Commission estimates using this

methodology that there are fewer than

2,295 small entity telephone

communications companies (other than

radiotelephone companies) that may be

affected by the actions proposed herein

and seeks comment on this conclusion.

14. Local Exchange Carriers. Although

neither the Commission nor the SBA

has developed a definition of small

providers of local exchange services, the

Commission considered two

methodologies available for making

these estimates. The closest applicable

definition under SBA rules is for

telephone communications companies

other than radiotelephone (wireless)

companies (SIC 4813) (Telephone

Communications, Except

Radiotelephone) as previously detailed,

supra. The Commission’s alternative

method for estimation utilizes the data
43496 Federal Register / Vol. 62, No. 157 / Thursday, August 14, 1997 / Proposed Rules

that it collects annually in connection

with the Telecommunications Relay

Service (TRS). This data provides the

Commission with the most reliable

source of information of which it is

aware regarding the number of LECs

nationwide. According to the

Commission’s most recent data, 1,347

companies reported that they were

engaged in the provision of local

exchange services. Although it seems

certain that some of these carriers are

not independently owned and operated,

or have more than 1,500 employees, we

are unable at this time to estimate with

greater precision the number of

incumbent LECs that would qualify as

small business concerns under SBA’s

definition. Consequently, the

Commission estimates that there are

fewer than 1,347 small LECs (including

small incumbent LECs) that may be

affected by the actions proposed in the

Further NPRM.

15. Non-LEC wireline carriers. Next

the Commission estimates the number

of non-LEC wireline carriers, including

interexchange carriers (IXCs),

competitive access providers (CAPs),

Operator Service Providers (OSPs), Pay

Telephone Operators, and resellers that

may be affected by these rules. Because

neither the Commission nor the SBA

has developed definitions for small

entities specifically applicable to these

wireline service types, the closest

applicable definition under the SBA

rules for all these service types is for

telephone communications companies

other than radiotelephone (wireless)

companies. However, the TRS data

provides an alternative source of

information regarding the number of

IXCs, CAPs, OSPs, Pay Telephone

Operators, and resellers nationwide.

According to the Commission’s most

recent data: 130 companies reported

that they are engaged in the provision of

interexchange services; 57 companies

reported that they are engaged in the

provision of competitive access services;

25 companies reported that they are

engaged in the provision of operator

services; 271 companies reported that

they are engaged in the provision of pay

telephone services; and 260 companies

reported that they are engaged in the

resale of telephone services and 30

reported being ‘‘other’’ toll carriers.

Although it seems certain that some of

these carriers are not independently

owned and operated, or have more than

1,500 employees, the Commission is

unable at this time to estimate with

greater precision the number of IXCs,

CAPs, OSPs, Pay Telephone Operators,

and resellers that would qualify as small

business concerns under SBA’s

definition. Firms filing TRS Worksheets

are asked to select a single category that

best describes their operation. As a

result, some long distance carriers

describe themselves as resellers, some

as OSPs, some as ‘‘other,’’ and some

simply as IXCs. Consequently, the

Commission estimates that there are

fewer than 130 small entity IXCs; 57

small entity CAPs; 25 small entity OSPs;

271 small entity pay telephone service

providers; and 260 small entity

providers of resale telephone service;

and 30 ‘‘other’’ toll carriers that might

be affected by the actions proposed in

the Further NPRM.

16. Radiotelephone (Wireless)

Carriers: The SBA has developed a

definition of small entities for Wireless

(Radiotelephone) Carriers. The Census

Bureau reports that there were 1,176

such companies in operation for at least

one year at the end of 1992. According

to the SBA’s definition, a small business

radiotelephone company is one

employing fewer than 1,500 persons.

The Census Bureau also reported that

1,164 of those radiotelephone

companies had fewer than 1,000

employees. Thus, even if all of the

remaining 12 companies had more than

1,500 employees, there would still be

1,164 radiotelephone companies that

might qualify as small entities if they

are independently owned and operated.

Although it seems certain that some of

these carriers are not independently

owned and operated, the Commission is

unable to estimate with greater

precision the number of radiotelephone

carriers and service providers that

would both qualify as small business

concerns under SBA’s definition.

Consequently, the Commission

estimates that there are fewer than 1,164

small entity radiotelephone companies

that might be affected by the actions

proposed in the Further NPRM.

17. Cellular and Mobile Service

Carriers. In an effort to further refine its

calculation of the number of

radiotelephone companies affected by

the rules adopted herein, the

Commission considers the categories of

radiotelephone carriers, Cellular Service

Carriers and Mobile Service Carriers.

Neither the Commission nor the SBA

has developed a definition of small

entities specifically applicable to

Cellular Service Carriers and to Mobile

Service Carriers. The closest applicable

definition under SBA rules for both

services is for telephone companies

other than radiotelephone (wireless)

companies. The most reliable source of

information regarding the number of

Cellular Service Carriers and Mobile

Service Carriers nationwide of which

the Commission is aware appears to be

the data that it collects annually in

connection with the TRS. According to

the Commission’s most recent data, 792

companies reported that they are

engaged in the provision of cellular

services and 138 companies reported

that they are engaged in the provision of

mobile services. Although it seems

certain that some of these carriers are

not independently owned and operated,

or have more than 1,500 employees, the

Commission is unable at this time to

estimate with greater precision the

number of Cellular Service Carriers and

Mobile Service Carriers that would

qualify as small business concerns

under SBA’s definition. Consequently,

the Commission estimates that there are

fewer than 792 small entity Cellular

Service Carriers and fewer than 138

small entity Mobile Service Carriers that

might be affected by the actions

proposed in the Further NPRM.

18. Broadband PCS Licensees. In an

effort to further refine its calculation of

the number of radiotelephone

companies affected by the rules adopted

herein, the Commission considers the

category of radiotelephone carriers,

Broadband PCS Licensees. The

broadband PCS spectrum is divided into

six frequency blocks designated A

through F. As set forth in 47 CFR

24.720(b), the Commission has defined

‘‘small entity’’ in the auctions for Blocks

C and F as a firm that had average gross

revenues of less than $40 million in the

three previous calendar years. For Block

F, an additional classification for ‘‘very

small business’’ was added and is

defined as an entity that, together with

its affiliates, has average gross revenues

of not more than $15 million for the

preceding three calendar years. The

Commissions definition of a ‘‘small

entity’’ in the context of broadband PCS

auctions has been approved by SBA.

The Commission has auctioned

broadband PCS licenses in Blocks A

through F. The Commission does not

have sufficient data to determine how

many small businesses bid successfully

for licenses in Blocks A and B. There

were 183 winning bidders that qualified

as small entities in the Blocks C, D, E,

and F auctions. Based on this

information, the Commission concludes

that the number of broadband PCS

licensees that may be affected by the

actions proposed in the Further NPRM

includes, at a minimum, the 183

winning bidders that qualified as small

entities in the Blocks C through F

broadband PCS auctions.

19. SMR Licensees. Pursuant to 47

CFR 90.814(b)(1), the Commission has

defined ‘‘small entity’’ in auctions for

geographic area 800 MHz and 900 MHz

SMR licenses as a firm that had average
Federal Register / Vol. 62, No. 157 / Thursday, August 14, 1997 / Proposed Rules 43497

annual gross revenues of less than $15

million in the three previous calendar

years. This definition of a ‘‘small entity’’

in the context of 800 MHz and 900 MHz

SMR has been approved by the SBA.

The rules proposed in the Further

NPRM may apply to SMR providers in

the 800 MHz and 900 MHz bands that

either hold geographic area licenses or

have obtained extended implementation

authorizations. The Commission does

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 less than $15 million. The

Commission assumes, for purposes of

the IRFA, that all of the extended

implementation authorizations may be

held by small entities, which may be

affected by the rules proposed in the

Further NPRM.

20. Potential SMR Licensees. The

Commission completed its auctions for

geographic area licenses in the 900 MHz

SMR band on April 15, 1996. There

were 60 winning bidders who qualified

as small entities in the 900 MHz

auction. Based on this information, the

Commission concludes that the number

of geographic area SMR licensees that

might be affected by the rules proposed

in this Further NPRM includes these 60

small entities. No auctions have been

held for 800 MHz geographic area SMR

licenses. Therefore, no small entities

currently hold these licenses. A total of

525 licenses will be awarded for the

upper 200 channels in the 800 MHz

geographic area SMR auction. However,

the Commission has not yet determined

how many licenses will be awarded for

the lower 230 channels in the 800 MHz

geographic area SMR auction. There is

no basis, moreover, on which to

estimate how many small entities will

win these licenses. Given that nearly all

radiotelephone companies have fewer

than 1,000 employees and that no

reliable estimate of the number of

prospective 800 MHz licensees can be

made, the Commission assumes, for

purposes of the IRFA, that all of the

licenses may be awarded to small

entities who, thus, may be affected by

the rules proposed in the Further

NPRM.

21. Cable Systems: SBA has

developed a definition of small entities

for cable and other pay television

services, which includes all such

companies generating less than $11

million in revenue annually. 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 1,423 such cable and

other pay television services generating

less than $11 million in revenue that

were in operation for at least one year

at the end of 1992.

(a) The Commission has developed its

own definition of a small cable system

operator for the purposes of rate

regulation. Under the Commission’s

rules, a ‘‘small cable company,’’ is one

serving fewer than 400,000 subscribers

nationwide. 47 CFR 76.901(e). Based on

the Commission’s most recent

information, it estimates that there were

1,439 cable operators that qualified as

small cable system operators at the end

of 1995. Since then, some of those

companies may have grown to serve

over 400,000 subscribers, and others

may have been involved in transactions

that caused them to be combined with

other cable operators. Consequently, the

Commission estimates that there are

fewer than 1,439 small entity cable

system operators that may be affected by

the rules proposed in the Further

NPRM.

(b) The Communications Act also

contains a definition of a small cable

system operator, which is ‘‘a cable

operator that, directly or through an

affiliate, serves in the aggregate fewer

than 1 percent of all subscribers in the

United States and is not affiliated with

any entity or entities whose gross

annual revenues in the aggregate exceed

$250,000,000.’’ 47 U.S.C. 543(m)(2). The

Commission has determined that there

are 61,700,000 subscribers in the United

States. Therefore, the Commission

found that an operator serving fewer

than 617,000 subscribers shall be

deemed a small operator, if its annual

revenues, when combined with the total

annual revenues of all of its affiliates, do

not exceed $250 million in the

aggregate. Based on available data, the

Commission finds that the number of

cable operators serving 617,000

subscribers or less totals 1,450.

Although it seems certain that some of

these cable system operators are

affiliated with entities whose gross

annual revenues exceed $250,000,000,

the Commission is unable at this time to

estimate with greater precision the

number of cable system operators that

would qualify as small cable operators

under the definition in the

Communications Act.

iv. Summary of Projected Reporting,

Recordkeeping, and Other Compliance

Requirements

22. The proposed rules would impose

verification and disclosure requirements

upon telecommunications carriers that

wish to submit or execute a change in

a subscriber’s selection of a provider of

telecommunications service. Submitting

and executing telecommunications

carriers would be required to ensure

that a carrier change comports with the

verification requirements of 47 CFR

64.1100 and 64.1150 established by the

Commission. Furthermore, if a

subscriber is a victim of slamming, the

unauthorized carrier would be required

to remit to the properly authorized

carrier (1) all charges paid by the

subscriber from the time the slam

occurred, and (2) the value of any

premiums to which the subscriber

would have been entitled if the slam

had not occurred. The properly

authorized carrier would be required to

request such payments from the

unauthorized carrier within ten days of

notification from the subscriber that an

unauthorized carrier change has

occurred. Upon notification that the

subscriber has been slammed, the

unauthorized carrier would be required

to remit such payments to the properly

authorized carrier. The subscriber’s

properly authorized

telecommunications carrier would then

be responsible for restoring to the

subscriber any premiums to which the

subscriber would have been entitled had

the slam not occurred. In the event of

disputes between carriers regarding the

transfer of charges and the value of lost

premiums, the carriers would be

required to pursue private settlement

negotiations before instituting

proceedings before the Commission to

resolve such disputes.

v. Significant Alternatives to Proposed

Rules Which Minimize the Significant

Economic Impact on Small Entities and

Small Incumbent LECs and Accomplish

Stated Objectives

23. The Commission has considered

proposing no rule changes beyond those

specifically required by the Act.

Therefore, as discussed above, the

Commission is proposing very limited

rule changes to its existing rules which,

given that slamming is becoming an

increasingly prevalent practice, it

believes that there are minimally

intrusive steps necessary to discourage

possible evasion of the Subscriber

Carrier Selection Change requirements

contained in Section 258 of the

Communications Act. The Commission

proposes that, in the event of a dispute

between carriers under these liability

provisions, the carriers involved in such

disputes must pursue private settlement

negotiations regarding the transfer of

charges and the value of lost premiums

from the unauthorized carrier to the

properly authorized carrier. The
43498 Federal Register / Vol. 62, No. 157 / Thursday, August 14, 1997 / Proposed Rules

Commission believes that the adoption

of such a dispute mechanism will lessen

the economic impact of a dispute on

small entities. Under the proposed

rules, telecommunications carriers,

including small entities, that violate the

Commission’s verification rules and

slam subscribers would be liable to the

subscriber’s properly authorized carrier

in an amount equal to all charges paid

by the slammed subscriber plus the

value of premiums to which the

subscriber would have been entitled had

the slam not occurred. The Commission

invites parties commenting on the

regulatory analysis to provide

information as to the number of small

businesses that would be affected by the

proposed regulations and identify

alternatives that would reduce the

burden on these entities while still

ensuring that subscribers’

telecommunications carrier selections

are not changed without their

authorization.

24. Although the Commission has

proposed no rule regarding the

circumstances under which resale

carriers must notify their subscribers of

a change in their underlying network

provider, the Commission received a

request for clarification of this issue

from TRA. TRA proposes that, instead

of determining the materiality of such

changes on a case-by-case basis, the

Commission establish a ‘‘bright-line’’

materiality test that would offer the

subscriber safeguards now provided by

the current case-by-case approach,

while minimizing the regulatory burden

on small to mid-sized carriers.

According to TRA, the unpredictability

of the case-by-case approach is unduly

burdensome on small to mid-sized

resale carriers, and thus diminishes

competition. The Commission invites

parties to comment on whether the

current case-by-case approach has a

significant economic impact on small

entities, and on whether the

Commission’s proposal to establish a

bright-line test for determining whether

a subscriber has relied on a resale

carrier’s identity of its underlying

facilities-based network provider, hence

requiring that the resale carrier notify

the subscriber if the underlying network

provider is changed, would minimize

any significant economic impact. The

Commission also seeks comment on

alternatives that would reduce the

burden on these entities without

diminishing consumer safeguards now

in place.

vi. Federal Rules That May Overlap,

Duplicate, or Conflict With the Proposed

Rules

25. None.

V. Conclusion

26. With the Further NPRM, the

Commission seeks comment on the

foregoing issues regarding

implementation of Section 258 of the

Telecommunications Act of 1996 and

PC-change verification procedures to

deter illegal changes in subscriber

carrier selections. Any party disagreeing

with the Commission’s tentative

conclusions should explain with

specificity its position in terms of costs

and benefits.

VI. Ordering Clauses

27. It is ordered, pursuant to Sections

1, 4, 201–205, 215, 218, 220 and 258 of

the Communications Act of 1934, as

amended, 47 U.S.C. 151, 154, 201–205,

215, 218, 220, and 258, that a further

notice of proposed rule making is

issued, proposing the amendment of 47

CFR Part 64 as set forth below.

28. It is further ordered that the Chief

of the Common Carrier Bureau is

delegated authority to require the

submission of additional information,

make further inquiries, and modify the

dates and procedures if necessary to

provide for a fuller record and a more

efficient proceeding.

29. It is further ordered that the

Secretary shall send a copy of this

further notice of proposed rule making,

including the Initial Regulatory

Flexibility Analysis, to the Chief

Counsel for Advocacy of the Small

Business Administration, in accordance

with paragraph 603(a) of the Regulatory

Flexibility Act, 5 U.S.C. 601 et seq.

(1981).

List of Subjects in 47 CFR Part 64

Communications common carriers,

Consumer protection,

Telecommunications.

Federal Communications Commission

William F. Caton,

Acting Secretary.

Rules Changes

47 CFR Part 64 is proposed to be

amended as follows:

1. The authority citation for part 64

continues to read as follows:

Authority: Sec. 4, 48 Stat. 1066, as

amended; 47 U.S.C. 154, unless otherwise

noted. Interpret or apply secs. 201, 218, 226,

228, 258, 48 Stat. 1070, as amended, 1077; 47

U.S.C. 201, 218, 226, 228, 258, unless

otherwise noted.

2. The heading for Subpart K is

proposed to be revised to read as

follows:

Subpart K—Changing

Telecommunications Service

3. Section 64.1100 is proposed to be

revised to read as follows:

§ 64.1100 Verification of orders for

telecommunications service generated by

telemarketing.

No telecommunications carrier shall

submit a primary carrier change order

generated by telemarketing unless and

until the order has first been confirmed

in accordance with the following

procedures:

(a) The telecommunications carrier

has obtained the subscriber’s written

authorization in a form that meets the

requirements of § 64.1150; or

(b) The telecommunications carrier

has obtained the subscriber’s electronic

authorization, placed from the

telephone number(s) on which the

primary carrier is to be changed, to

submit the order that confirms the

information described in paragraph (a)

of this section to confirm the

authorization. Telecommunications

carriers electing to confirm sales

electronically shall establish one or

more toll-free telephone numbers

exclusively for that purpose. Calls to the

number(s) will connect a subscriber to

a voice response unit, or similar

mechanism that records the required

information regarding the primary

carrier change, including automatically

recording the originating automatic

numbering identification; or

(c) An appropriately qualified

independent third party operating in a

location physically separate from the

telemarketing representative has

obtained the subscriber’s oral

authorization to submit the primary

carrier change order that confirms and

includes appropriate verification data

(e.g., the subscriber’s date of birth or

social security number); or

(d) Within three business days of the

subscriber’s request for a primary carrier

change, the telecommunications carrier

must send the subscriber an information

package by first class mail containing at

least the following information

concerning the requested change:

(1) An explanation that the

information is being sent to confirm a

telemarketing order placed by the

subscriber within the previous week;

(2) The name of the subscriber’s

current carrier;

(3) The name of the newly-requested

carrier;

(4) A description of any terms,

conditions, or charges that will be

incurred;

(5) The name of the person ordering

the change;
Federal Register / Vol. 62, No. 157 / Thursday, August 14, 1997 / Proposed Rules 43499

(6) The name, address, and telephone

number of both the subscriber and the

soliciting carrier;

(7) A postpaid postcard which the

subscriber can use to deny, cancel or

confirm a service order;

(8) A clear statement that if the

customer does not return the postcard

the customer’s long distance service will

be switched within 14 days after the

date the information package was

mailed to [name of soliciting carrier];

(9) The name, address, and telephone

number of a contact point at the

Commission for consumer complaints;

and

(10) Carriers must wait 14 days after

the form is mailed to subscribers before

submitting their primary carrier change

orders. If subscribers have cancelled

their orders during the waiting period,

carriers cannot submit the subscribers’

orders.

4. Section 64.1150 is proposed to be

revised to read as follows:

§ 64.1150 Letter of agency form and

content.

(a) A telecommunications carrier

relying on a written authorization for a

primary carrier change must obtain a

letter of agency as specified in this

section. Any letter of agency that does

not conform with this section is invalid.

(b) The letter of agency shall be a

separate document (an easily separable

document containing only the

authorizing language described in

paragraph (e) of this section) having the

sole purpose of authorizing a

telecommunications carrier to initiate a

primary carrier change. The letter of

agency must be signed and dated by the

subscriber to the telephone line(s)

requesting the primary carrier change.

(c) The letter of agency shall not be

combined on the same document with

inducements of any kind.

(d) Notwithstanding paragraphs (b)

and (c) of this section, the letter of

agency may be combined with checks

that contain only the required letter of

agency language prescribed in

paragraph (e) of this section and the

necessary information to make the

check a negotiable instrument. The

letter of agency check shall not contain

any promotional language or material.

The letter of agency check shall contain

in easily readable, bold-face type on the

front of the check, a notice that the

consumer is authorizing a primary

carrier change by signing the check. The

letter of agency language also shall be

placed near the signature line on the

back of the check.

(e) At a minimum, the letter of agency

must be printed with a type of sufficient

size and readable type to be clearly

legible and must contain clear and

unambiguous language that confirms:

(1) The subscriber’s billing name and

address and each telephone number to

be covered by the primary carrier

change order;

(2) The decision to change the

primary carrier from the current

telecommunications carrier to the

prospective telecommunications carrier;

(3) That the subscriber designates

[name of the submitting carrier] to act as

the subscriber’s agent for the primary

carrier change;

(4) That the subscriber understands

that only one telecommunications

carrier may be designated as the

subscriber’s interstate or interLATA

primary interexchange carrier for any

one telephone number. To the extent

that a jurisdiction allows the selection

of additional primary interexchange

carriers (e.g., for intrastate, intraLATA

or international calling), the letter of

agency must contain separate statements

regarding those choices. One

telecommunications carrier can be both

a subscriber’s interstate or interLATA

primary interexchange carrier and a

subscriber’s intrastate or intraLATA

primary interexchange carrier; and

(5) That the subscriber understands

that any primary carrier selection the

subscriber chooses may involve a charge

to the subscriber for changing the

subscriber’s primary carrier.

(f) Any carrier designated in a letter

of agency as a primary interexchange

carrier must be the carrier directly

setting the rates for the subscriber.

(g) Letters of agency shall not suggest

or require that a subscriber take some

action in order to retain the subscriber’s

current telecommunications carrier.

(h) If any portion of a letter of agency

is translated into another language then

all portions of the letter of agency must

be translated into that language. Every

letter of agency must be translated into

the same language as any promotional

materials, oral descriptions or

instructions provided with the letter of

agency.

5. Section 64.1160 is proposed to be

added to subpart K to read as follows:

§ 64.1160 Changes in subscriber carrier

selections.

(a) Prohibition. No

telecommunications carrier shall submit

or execute a change in a subscriber’s

selection of a provider of

telecommunications service except in

accordance with the verification

procedures prescribed in this Subpart.

Nothing in this section shall preclude

any State commission from enforcing

these procedures with respect to

intrastate services.

(1) Where the submitting carrier

submits a verification that fails to

comply with § 64.1160, the executing

carrier will be liable where there has

been some wrongdoing or malfeasance

on the part of the executing carrier;

otherwise the submitting carrier will be

solely liable for violating § 64.1160(a).

(2) Where the submitting carrier has

complied with § 64.1160(a), but the

executing carrier executes the change

inconsistent with the subscriber carrier

change selection, the executing carrier

will be solely liable for violating

§ 64.1160(a).

(3) When a dispute arises between the

submitting and executing carriers the

carriers must pursue private settlement

negotiations prior to requesting that the

Commission institute proceedings to

resolve any such dispute.

(b) Carrier Liability for Charges. Any

telecommunications carrier that violates

the verification procedures prescribed

by the Commission and that collects

charges for telecommunications service

from a subscriber shall be liable to the

subscriber’s properly authorized carrier

in an amount equal to all charges paid

by such subscriber after such violation.

The remedies provided by this

subsection are in addition to any other

remedies available by law.

6. Section 64.1170 is proposed to be

added to subpart K to read as follows:

§ 64.1170 Reimbursement procedures.

(a) Upon receiving notification from

the subscriber that the subscriber’s

carrier selection was changed without

authorization, the properly authorized

carrier must, within ten days, request

from the unauthorized carrier the

following:

(1) An amount equal to the charges

paid by the subscriber to the

unauthorized carrier; and,

(2) An amount equal to the value of

any premiums to which the subscriber

would have been entitled if the

subscriber’s selection had not been

changed. Where a subscriber notifies the

unauthorized carrier, rather than the

properly authorized carrier, of an

unauthorized subscriber carrier

selection change, the unauthorized

carrier must, within ten days, notify the

properly authorized carrier.

(b) Upon notification of a violation of

§ 64.1160(a), the unauthorized carrier

must remit to the affected subscriber’s

properly authorized carrier the total

charges collected from the subscriber

and the value of any premiums to which

the consumer would have been entitled

if the subscriber’s selection had not

been changed.

(c) Restoration of Premium Programs.

Upon receiving from the unauthorized
43500 Federal Register / Vol. 62, No. 157 / Thursday, August 14, 1997 / Proposed Rules

carrier the value of premiums to which

the consumer would have been entitled

if the subscriber’s selection had not

been changed, the properly authorized

carrier must provide or restore to the

subscriber any premiums to which the

consumer would have been entitled if

the subscriber’s selection had not been

changed. Where a particular premium

cannot be restored, the properly

authorized carrier may substitute an

equivalent premium or dollar amount as

reasonably determined by the properly

authorized carrier.

(d) Dispute Resolution. Carriers must

pursue private settlement negotiations

regarding the transfer of charges and the

value of lost premiums from the

unauthorized carrier to the properly

authorized carrier prior to requesting

that the Commission institute

proceedings to resolve any dispute

regarding such transfer of charges and

the value of lost premiums.

[FR Doc. 97–21528 Filed 8–13–97; 8:45 am]

BILLING CODE 6712–01–P