11750 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Proposed Rules

1 Pub. L. 104, Sec. 701, 110 Stat. 56 (1996)

(codified at 47 U.S.C. § 228).

2This statement summarizes Congress’ findings

regarding the 900-number industry at the time it

passed the legislation. For greater detail concerning

the problems Congress found to be associated with

900-number services, see 15 U.S.C. § 5701(b).

3Title I of TDDRA directed the Federal

Communications Commission (FCC) to adopt

regulations defining the obligations of common

carriers with respect to the provision of pay-per-call

services. The FCC published its Notice of Proposed

Rulemaking and Notice of Inquiry at 58 FR 14,371

(March 17, 1993). The FCC’s Rules are at 47 CFR

64.228.

4The Statement of Basis and Purpose and Final

Rule was published at 58 FR 42364 (August 9,

1993).

FEDERAL TRADE COMMISSION

16 CFR Part 308

900-Number Rule Review; Request For

Comment Regarding Possible

Modification of Definition of ‘‘Pay-PerCall Services’’ Pursuant to the

Telecommunications Act of 1996

AGENCY: Federal Trade Commission.

ACTION: Rule review and request for

public comments.

SUMMARY: The Federal Trade

Commission (‘‘the Commission’’ or

‘‘FTC’’) is requesting public comment

on the Commission’s Trade Regulation

Rule Pursuant to the Telephone

Disclosure and Dispute Resolution Act

of 1992 (‘‘the 900-Number Rule’’). The

900-Number Rule governs the

advertising and operation of pay-percall services, and establishes billing

dispute procedures for such services.

The 900-Number Rule requires that the

Commission initiate a rulemaking

review proceeding to evaluate the Rule’s

operation no later than four years after

its effective date of November 1, 1993.

Pursuant to this mandatory rule review

requirement, the Commission seeks

comment about the overall costs and

benefits of the 900-Number Rule and its

overall regulatory and economic impact.

In addition, the Telecommunications

Act of 1996 1 granted the Commission

authority to expand the scope of the

900-Number Rule by broadening the

definition of pay-per-call services.

Therefore, the Commission is also

seeking public comment on whether it

should expand the scope of its 900-

Number Rule to ‘‘audio information or

audio entertainment’’ services provided

through dialing patterns other than 900

numbers. These questions are published

in a Request for Comment which

follows the rule review portion of this

notice.

This document invites written

comments and sets forth a list of

specific questions and issues upon

which the Commission particularly

desires additional information. This

document also contains an invitation to

participate in a public workshopconference, to be held following the

close of the comment period, to afford

Commission staff and interested parties

an opportunity to explore and discuss

issues raised during the comment

period.

DATES: Written comments will be

accepted until May 12, 1997.

Notification of interest in participating

in the public workshop-conference also

must be submitted on or before May 12,

1997. The public workshop-conference

will be held on June 19 and 20, 1997,

from 9:00 a.m. until 5:00 p.m.

ADDRESSES: Five paper copies of each

written comment should be submitted

to the Office of the Secretary, Room 159,

Federal Trade Commission, Sixth Street

and Pennsylvania Avenue, N.W.,

Washington, D.C. 20580. To encourage

prompt and efficient review and

dissemination of the comments to the

public, all comments should also be

submitted, if possible, in electronic

form, on either a 51⁄4 or a 31⁄2 inch

computer disk, with a label on the disk

stating the name of the commenter and

the name and version of the word

processing program used to create the

document. (Programs based on DOS are

preferred. Files from other operating

systems should be submitted in ASCII

text format to be accepted.) Individual

members of the public filing comments

need not submit multiple copies or

comments in electronic form. Comments

should be identified as ‘‘900-Number

Rule Review—Comment. FTC File No.

R611016.’’

Notification of interest in

participating in the public workshopconference should be submitted in

writing to Marianne Kastriner

Schwanke, Division of Marketing

Practices, Federal Trade Commission,

Sixth and Pennsylvania Ave., N.W.,

Washington, D.C. 20580. The public

workshop-conference will be held at the

Federal Trade Commission, 6th Street

and Pennsylvania Avenue, N.W.,

Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

Marianne Kastriner Schwanke, (202)

326-3165, Adam Cohn, (202) 326–3411,

or Carole Danielson, (202) 326–3115,

Division of Marketing Practices, Bureau

of Consumer Protection, Federal Trade

Commission, Washington, D.C. 20580.

SUPPLEMENTARY INFORMATION: The

Commission has determined, as part of

its oversight responsibilities, to review

rules and guides periodically in order to

obtain information about the costs and

benefits of its rules and guides, as well

as their regulatory and economic

impact. The information the

Commission obtains assists it in

identifying rules and guides that

warrant modification or rescission. In

accord with the Commission’s general

policy to review periodically all of its

rules and guides, when the Commission

adopted the 900-Number Rule, it

included Section 308.9, which imposes

a requirement to undertake a review of

the Rule no later than four years after its

effective date of November 1, 1993.

Therefore, at this time, pursuant to

Section 308.9 of the Rule, the

Commission is initiating this mandatory

rule review, and hereby solicits written

public comments concerning the

operation of the 900-Number Rule.

Simultaneous with the Rule review,

the Commission also is seeking public

comment on whether it should expand

the scope of its 900-Number Rule to

information or entertainment services

provided through dialing patterns other

than 900 numbers, as authorized by the

Telecommunications Act of 1996.

Section A. Background

Telephone Disclosure and Dispute

Resolution Act of 1992

Congress enacted the Telephone

Disclosure and Dispute Resolution Act

of 1992 (‘‘TDDRA’’), 15 U.S.C. § 5701 et

seq., to curtail certain unfair and

deceptive practices perpetrated by some

pay-per-call businesses, and to

encourage the growth of the legitimate

pay-per-call industry.2 Titles II and III of

TDDRA required the FTC to prescribe

regulations governing pay-per-call

services.3 TDDRA directed the

Commission to enact regulations

governing the advertising and operation

of pay-per-call services. Among other

things, TDDRA required that certain

disclosures appear in all advertising for

pay-per-call programs and in

introductory messages (‘‘preambles’’) at

the start of the pay-per-call programs,

prohibited pay-per-call providers from

engaging in certain practices (such as

directing their services to children

under 12 years of age), and required that

the FTC’s regulations establish

procedures for correcting billing errors

in connection with pay-per-call

services. TDDRA granted the FTC

limited jurisdiction over common

carriers for purposes of the 900-Number

Rule.

900-Number Rule

Pursuant to TDDRA, the FTC adopted

its 900-Number Rule, 16 CFR Part 308,

on July 26, 1993, and it became effective

November 1, 1993.4 The Rule requires
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Proposed Rules 11751

5 Other protections were established by the

Federal Communications Commission (FCC) in

their rules set out at 47 CFR 64.228. Under those

rules, a consumer’s telephone service cannot be

disconnected for failure to pay charges for a 900

number call, and 900 number blocking must be

made available to consumers who do not wish to

have access to 900 number service from their

telephone lines.

6 ‘‘The term ‘pay-per-call services’ has the

meaning provided in section 228 of Title 47.’’ 15

U.S.C. § 5714(1).

7Section 228(i)(1) of the Communications Act of

1934, 47 U.S.C. § 228(i)(1) provides that:

The term ‘pay-per-call services’ means any

service—

(A) in which any person provides or purports to

provide—

(i) audio information or audio entertainment

produced or packaged by such person;

(ii) access to simultaneous voice conversation

service; or

(iii) any service, including the provision of a

product, the charges for which are assessed on the

basis of completion of the call;

(B) for which the caller pays a per-call or pertime-interval charge that is greater than, or in

addition to, the charge for transmission of the call;

and

(C) which is accessed through use of a 900

telephone number or other prefix or area code

designated by the [Federal Communications]

Commission in accordance with subsection (b)(5)

[47 U.S.C.§ 228(b)(5)].’’

8The term ‘‘audiotext services’’ describes audio

information and entertainment services offered

through any dialing pattern, including services

accessed via 900-number, as well as international

and other non-900-number, dialing patterns. In this

notice, where the Commission seeks comment on

the effect of the 900-Number Rule on the industry,

we use the phrase ‘‘900-number services’’ to

describe those services currently covered by the

Rule. Where we ask questions regarding the larger

universe of information and entertainment services

offered through the telephone, we use the term

‘‘audiotext services.’’

9 Policies and Rules Governing Interstate Pay-PerCall and Other Information Services Pursuant to the

Telecommunications Act of 1996, Order and Notice

of Proposed Rulemaking, CC Docket No. 96–146, 11

FCC Rcd 14,738 (1996) (‘‘FCC Pay-Per-Call Order

and Notice’’).

that advertisements for 900 numbers

contain certain disclosures, including

information about the cost of the call.

This information must also be included

in an introductory message (preamble)

at the beginning of any 900-number

program where the cost of the call could

exceed two dollars. The Rule requires

that anyone who calls a 900-number

service must be given the opportunity to

hang up, at the conclusion of the

preamble, without incurring any charge

for the call. In addition, the Rule

requires that all preambles to 900-

number services state that individuals

under the age of 18 must have the

permission of a parent or guardian to

complete the call.

The 900-Number Rule also establishes

procedures for resolving billing disputes

for 900-number calls. 16 CFR 308.7. The

Rule imposes certain obligations on

entities that bill and collect for 900-

number services, such as investigating

reports by consumers of ‘‘billing errors,’’

a defined term in the Rule.5

Initiation of Rule Review

Section 308.9 of the 900-Number

Rule, 16 CFR 308.9, requires that the

Commission initiate a rulemaking

review proceeding to evaluate the Rule’s

operation no later than four years after

its effective date of November 1, 1993.

Although the Rule review is not

required until November 1997, the

Commission has determined that it

would be more efficient to conduct the

evaluation at this time in conjunction

with its issuance of a Request for

Comment regarding the possible

expanded definition of ‘‘pay-per-call

services’’ as provided by the

Telecommunications Act of 1996.

Telecommunications Act of 1996

Authority to Expand the Definition of

Pay-Per-Call Services

On February 8, 1996, the President

signed into law the

Telecommunications Act of 1996 to

provide a regulatory framework for

telecommunications and information

technologies and services. Section

701(b) of the Telecommunications Act

provides that:

Section 204 of [TDDRA] (15 U.S.C.

§ 5714(1)) 6 is amended to read as follows:

‘‘(1) The term ‘pay-per-call services’ has

the meaning provided in section 228(i) of the

Communications Act of 1934,7 except that

the Commission by rule may,

notwithstanding subparagraphs (B) and (C) of

Section 228(i)(1) of such Act, extend such

definition to other similar services providing

audio information or audio entertainment if

the [Federal Trade] Commission determines

that such services are susceptible to the

unfair and deceptive practices that are

prohibited by the rules prescribed pursuant

to section 201(a) [of TDDRA].’’ (Emphasis

supplied.)

Thus, Section 701(b) of the

Telecommunications Act authorizes the

FTC, for purposes of its 900-Number

Rule, to extend the definition of the

term ‘‘pay-per-call services’’—and, in

effect, the scope of coverage of the

Rule—without regard to whether a

caller to the service in question ‘‘pays a

per-call or per-time-interval charge that

is greater than, or in addition to, the

charge for transmission of the call,’’ and

without regard to whether a call to such

service is ‘‘accessed through use of a

900 telephone number or other prefix or

area code designated by the FCC’’ under

47 U.S.C.§ 228(b)(5) if the FTC

determines that such services ‘‘are

susceptible to the unfair and deceptive

practices that are prohibited by the rules

prescribed pursuant to section 201(a)’’

of TDDRA.

Therefore, at this time the

Commission is publishing a Request for

Comment to determine whether

audiotext services 8 that fall outside the

definition of ‘‘pay-per-call’’ in the

original rule are susceptible to the same

unfair and deceptive practices that

prompted passage of TDDRA. In other

words, the Commission seeks to

determine whether the definition of

‘‘pay-per-call services’’ should be

extended to other services similar to

those presently covered by the Rule and,

if so, what such an expanded definition

should be.

Section 701 of the

Telecommunications Act also modified

some additional provisions in Section

228 of title 47, mandating that the

Federal Communications Commission

amend its regulations regarding pay-percall services. The FCC took action to

implement this statutory mandate in

July 1996.9 In that proceeding, the FCC

also proposed certain other

modifications to its rules not expressly

mandated by statute to help reduce

fraudulent practices in the pay-per-call

industry. The Federal Trade

Commission thus seeks to determine

whether its rules should be changed to

take account of these recent changes and

proposed changes in FCC rules

regarding pay-per-call services. As

noted above, the Request for Comment

follows the rule review portion of this

notice.

Section B. Invitation to Comment

All persons are hereby given notice of

the opportunity to submit written data,

views, facts, and arguments concerning

the Commission’s 900-Number Rule.

The Commission invites written

comments to assist it in ascertaining the

facts necessary to reach a determination

as to the costs and benefits of the Rule

and its overall regulatory and economic

impact, and on whether to engage in a

rulemaking to amend the 900-Number

Rule. Written comments must be

submitted to the Office of the Secretary,

Room 159, Federal Trade Commission,

Sixth Street and Pennsylvania Avenue,

N.W. Washington, DC 20580, on or

before May 12, 1997. Comments

submitted will be available for public

inspection in accordance with the

Freedom of Information Act (5 U.S.C.

§ 552) and Commission Rules of

Practice, on normal business days

between the hours of 8:30 a.m. and 5

p.m. at the Public Reference Section,

Room 130, Federal Trade Commission,

Sixth Street and Pennsylvania Avenue,

N.W., Washington, D.C. 20580.
11752 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Proposed Rules

10 58 FR 13379.

11 58 FR 42399.

12 58 FR 13384.

13 58 FR 42399.

Section C. Public Workshop-Conference

The FTC staff will conduct a public

workshop-conference to discuss the

written comments received in response

to the Federal Register notice. The

purpose of the workshop-conference is

to afford Commission staff and

interested parties a further opportunity

to openly discuss and explore issues

raised in the notice and in the

comments, and, in particular, to

examine publicly any areas of

significant controversy or divergent

opinions that are raised in the written

comments. The conference is not

intended to achieve a consensus among

participants or between participants and

Commission staff with respect to any

issue raised in the comments.

Commission staff will consider the

views and suggestions made during the

conference, in conjunction with the

written comments, in formulating its

final recommendation to the

Commission concerning what action, if

any, to take in regard to amending the

900-Number Rule.

Commission staff will select a limited

number of parties, from among those

who submit written comments, to

represent the significant interests

affected by the issues raised in the

notice. These parties will participate in

an open discussion of the issues,

including asking and answering

questions based on their respective

comments. In addition, the workshop

will be open to the general public. The

discussion will be transcribed and the

transcription placed on the public

record.

To the extent possible, Commission

staff will select parties to represent the

following interests: advertisers, thirdparty billing and collection services,

pay-per-call information providers,

service bureaus, local exchange carriers,

long distance carriers, consumer groups,

federal and state law enforcement and

regulatory authorities; and any other

interests that Commission staff may

identify and deem appropriate for

representation.

Parties who represent the abovereferenced interests will be selected on

the basis of the following criteria:

1. The party submits a written

comment during the 60-day comment

period.

2. During the 60-day comment period

the party notifies Commission staff of its

interest in participating in the

workshop.

3. The party’s participation would

promote a balance of interests being

represented at the workshop-conference.

4. The party’s participation would

promote the consideration and

discussion of a variety of issues raised

in this notice.

5. The party has expertise in activities

affected by the issues raised in this

notice.

6. The number of parties selected will

not be so large as to inhibit effective

discussion among them.

The workshop-conference will be

held on June 19 and 20, 1997. Prior to

the workshop-conference, parties

selected will be provided with copies of

the comments from all participants

received in response to this notice.

Section D. Regulatory Flexibility Act

The Regulatory Flexibility Act

provides for an initial and final

regulatory analysis of the potential

impact on small businesses of Rules

proposed by federal agencies. (5 U.S.C.

§§ 603, 604) The Commission conducted

such an analysis when the 900-Number

Rule was promulgated in 1993. In

publishing the proposed regulations, the

Commission certified, subject to public

comment, that the proposed regulations

would not have a significant economic

impact on a substantial number of small

entities and, therefore, that the

provisions of the Regulatory Flexibility

Act, 5 U.S.C. 605(b), requiring the initial

regulatory analysis, did not apply.10 The

Commission noted that any economic

costs imposed on small entities were, in

many instances, specifically imposed by

statute. Where they were not, efforts had

been made to minimize any unforeseen

burdens on small entities by making the

proposed rule’s requirements flexible.

The public comments and information

received by the Commission did not

alter that conclusion.11

No analysis is required in connection

with this document because no new rule

or amendments are being proposed.

Nonetheless, the Commission wishes to

ensure that no substantial economic

impact is being overlooked that would

warrant an initial and final regulatory

flexibility analysis. Therefore, this

review of the 900-Number Rule also

requests public comment regarding the

effect of the Rule on the costs to,

profitability and competitiveness of, and

employment in small entities. The

Commission will revisit this issue in

connection with any Notice of Proposed

Rulemaking that may result from this

request for comments.

Section E. Paperwork Reduction Act

In the 1993 Notice of Proposed

Rulemaking on the 900-Number Rule,

the Commission solicited comments on

the need for and scope of possible

record keeping requirements in

provisions governing Commission

access to information and billing and

collection for pay-per-call services.12

Those requirements, had they been

adopted, would have constituted

‘‘collections of information’’ as defined

under the Paperwork Reduction Act, 44

U.S.C. 3501–3520. See 44 U.S.C. 3502

and 5 CFR 1320.7. However, the

Commission determined not to include

such requirements in its final Rule.13

Accordingly, the requirements of the

Paperwork Reduction Act were not

applicable to the final Rule. Similarly,

the requirements are not applicable to

this document because no collections of

information are required. The

Commission will revisit this issue in

connection with the publication of any

subsequent Notice of Proposed

Rulemaking that might result from this

request for comments.

Section F. Questions and Issues for

Comment Pursuant to Regulatory

Review of the Rule

The Commission is seeking comment

on various aspects of the 900-Number

Rule, in conjunction with its Rule

review. Without limiting the scope of

issues it is seeking comment on, the

Commission is particularly interested in

receiving comments on the questions

that follow. Where commenters

advocate changes to the Rule, please be

specific in describing suggested

changes. With respect to suggested

changes to the Rule, please describe any

potential costs and benefits such

changes might have on industry and

consumers. The Commission would also

be interested in commenters providing

any data that exist on issues raised in

the questions.

I. General Issues for Comment

1. Is there a continuing need for the

900-Number Rule?

(a) Since the Rule was issued, have

changes in technology, industry

structure, or economic conditions

affected the need for or effectiveness of

the Rule?

(b) Does the Rule include provisions

that are unnecessary?

(c) What are the aggregate costs and

benefits of the Rule?

(d) Have the costs or benefits of the

Rule dissipated over time?

(e) Does the Rule contain provisions

that have imposed costs not outweighed

by benefits?

2. What effect, if any, has the Rule

had on consumers?
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Proposed Rules 11753

14FCC Pay-Per-Call Order and Notice, see supra

note 9.

15 FCC Pay-Per-Call Order and Notice, see supra

note 9.

(a) What economic or other costs has

the Rule imposed on consumers?

(b) What benefits has the Rule

provided to consumers?

(c) What changes, if any, should be

made to the Rule to increase the benefits

to consumers?

(d) How would these changes affect

the compliance costs the Rule imposes

on industry?

3. What impact, if any, has the Rule

had on firms that must comply with it?

(a) What economic or other costs has

the Rule imposed on industry or

individual firms?

(b) What benefits has the Rule

provided to the industry or to

individual firms?

(c) What changes, if any, should be

made to the Rule to minimize any

burden or cost imposed on industry or

individual firms?

(d) How would the changes affect the

benefits provided by the Rule to

consumers or industry?

4. How has the Rule affected small

business entities with respect to costs,

profitability, competitiveness, and

employment? What would be the

economic impact on small businesses if

the Rule is left unchanged?

5. Are there regulatory alternatives

that might reduce any adverse economic

effect of the 900-Number Rule, yet

comply with the mandate of TDDRA to

curtail certain unfair and deceptive

practices by some 900-number

providers, yet encourage the growth of

the legitimate 900-number industry?

6. Are there additional advertising,

operating, or other standards for the

audiotext industry not included in the

Rule that might now be desirable or

necessary to prevent deception or other

abuses, or to prevent evasion of the

Rule’s requirements and prohibitions?

7. The FCC and FTC share regulatory

authority over the audiotext industry.

(a) Are there any unnecessary

regulatory burdens created by

overlapping jurisdiction? What can be

done to ease these burdens?

(b) Are there gaps where neither

agency has addressed a particular

abuse? For example, does such a

regulatory gap exist where a entity

claims status as a ‘‘common carrier’’ for

purposes of FTC regulation, but claims

that its actions are not those of a

common carrier for purposes of FCC

regulation?

(c) Does the Rule overlap or conflict

with other federal, state, or local

government laws or regulations?

8. How does Section 701 of the

Telecommunications Act of 1996

concerning the FCC’s regulation of the

pay-per-call industry, or the FCC’s

recently adopted and proposed

regulatory changes 14 under that section,

affect the FTC’s Rule, if at all? How

should the FTC’s Rule be amended to

harmonize with these changes and

proposed changes in the FCC regulatory

approach?

9. What categories of audiotext

services (e.g., sports, psychic, chat,

adult) are provided through 900

numbers?

(a) What percentage does each type

constitute of all audiotext services

accessed through 900 numbers?

(b) How much gross sales revenue has

each category generated in each year

since 1993?

(c) Have the gross sales revenues and/

or profits of information providers using

900 numbers changed since the Rule

was promulgated? What impact, if any,

has the 900-Number Rule had on the

level of gross sales revenues and/or

profits?

II. Definitions

10. Are the definitions set forth in

section 308.2 of the Rule effective for

the purpose of curbing unfair and

deceptive practices targeted by the

Rule?

(a) If not, how have the definitions

been inadequate?

(b) Are there additional definitions

that should be added to the Rule?

Explain.

11. The current definition of ‘‘service

bureau’’ states that the term includes

any person other than a common carrier.

(a) Is it appropriate to exclude

common carriers, regardless of

activities, from the definition?

(b) Should entities engaging in service

bureau functions be covered by the

Rule, even if they also engage in

‘‘common carrier’’ functions at other

times?

12. Has the Rule’s definition of

‘‘presubscription agreement’’ affected

the market for 900-number services? If

so, in what way?

(a) Who uses presubscription

agreements, and for what purpose?

(b) What opportunities for unfair and

deceptive practices exist under the

current definition of ‘‘presubscription

agreement’’?

(c) How might the definition be

changed to diminish or eliminate these

opportunities?

(d) Should the definition of

‘‘presubscription agreement’’ be

modified to harmonize with changes in

FCC rules made pursuant to the

Telecommunications Act of 1996, or to

harmonize with proposed changes made

by the FCC to the definition of

‘‘presubscription agreement’’? 15

(e) Would any changes in the

definition of ‘‘presubscription

agreement’’ be appropriate in light of

Section 701 of the Telecommunications

Act of 1996? For example, should the

Rule require that a presubscription

agreement be in writing?

III. Advertising

13. Are the advertising disclosure

provisions in the Rule adequate for

regulating advertising on the Internet or

on commercial online services?

(a) Should the Rule be more precise

regarding the definition of ‘‘clear and

conspicuous’’ in the context of

advertising on the Internet or on

commercial online services?

(b) Are there other forms of

advertising in other media for which the

Rule should provide specific advertising

disclosure requirements? Explain.

14. Does the Rule provide adequately

for disclosing the cost to consumers

prior to making a call to a 900-number

service?

(a) Do the current size requirements

ensure that the cost disclosure is ‘‘clear

and conspicuous’?

(b) Are there other more effective

means for ensuring that the

advertisements provide adequate cost

disclosures to consumers?

15. Are the required disclosures for

900-number services that advertise

sweepstakes sufficient to ensure that

consumers are informed of all material

information necessary to dispel

deception? Have there been abuses

associated with sweepstakes advertised

and offered through the use of a 900

number that make it necessary to

require additional protections for

consumers who respond to such

sweepstakes offers?

16. Is the requirement governing

‘‘telephone solicitations’’ in section

308.3(h) clear, meaningful, and

effective?

(a) Is there additional information that

such a solicitation should include to

ensure that consumers have sufficient

information prior to calling a 900-

number service advertised in this

manner?

(b) Is the Rule clear that it applies to

messages left on telephone answering

machines or telephone numbers left on

pagers?

(c) What about audio and non-audio

messages received on computers?

Should these or other message delivery

systems be explicitly included within

this provision?
11754 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Proposed Rules

16 58 FR 42387 (August 1993).

(d) Should ‘‘telephone message’’ as

used within section 308.3(h) be defined

and if so, how?

IV. Operation & Standards

17. In the Statement of Basis and

Purpose describing the Rule, 16 the

Commission recognized that at the time

the Rule was promulgated, timesensitive billing involved in 900-

number services was ‘‘accomplished in

one-minute increments, and that any

portion of a minute will be billed as full

time.’’

(a) Has the technology for calculating

usage time for billing purposes changed

since the implementation of the Rule? If

so, how?

(b) Is it possible using current

technology to stop the assessment of

time-based charges immediately upon

disconnection by the caller, and

therefore, bill consumers for fractions of

minutes?

18. How have technological changes

affected the way information providers

can and do set their rates?

(a) Is it now technologically possible

to suspend charges during a program, to

provide a period (or periods) of

programming free to the caller? Explain.

(b) Is it now technologically possible

to alter the rate at which a caller is

charged during a program, to provide a

period (or periods) of programming

charged to the caller at reduced rates or

at higher rates than other portions of the

call? Explain.

(c) Is it now technologically possible

to have a free introductory message

longer than 18 seconds, which was the

standard at the time the Rule was

adopted? Explain.

19. How has the requirement of a

preamble affected the 900 number

industry?

(a) Have preambles conferred benefits

on consumers who make 900-number

calls?

(b) How might the preamble

requirements be changed to make the

preambles more useful or informative to

the consumer? What costs would likely

arise from such changes?

(c) How might the preamble

requirements be changed to make

compliance easier for information

providers? Would such changes

diminish benefits to consumers and if

so, how?

20. Are preambles effective in

reducing unauthorized use of 900-

number services by minors or others?

How is this properly measured?

(a) How might preamble requirements

be changed to be made more effective in

addressing the problem of unauthorized

calls?

(b) What further actions might be

taken by industry or by the FTC to

reduce unauthorized calls to 900

number and other audiotext services?

21. Section 308.5(a)(3) requires that

the preamble state ‘‘that charges for the

call begin, and that to avoid charges the

call must be terminated, three seconds

after a clearly discernible signal or

tone.’’ If an information provider were

to provide, for example, the first two

minutes of an audiotext call free, what

should the preamble disclose to inform

callers when charges for the call begin?

(a) In the example above, should the

information provider be required to

inform the caller, through a tone or

other signal, when the free time has

expired?

(b) In the example above, at what

point(s), if any, during the call should

the disclosures be made? At what

point(s), if any, during the call should

a signal or tone occur?

(c) In the example above, would a

single signal following the preamble but

immediately preceding the free time

provide sufficient information to enable

consumers to avoid all or most charges

from remaining on the line after close of

the free time?

22. Section 308.5(a)(2)(iii) requires

that ‘‘if the call is billed on a variable

rate basis, the preamble shall state

* * * the cost of the initial portion of

the call, any minimum charges, and the

range of rates that may be charged

depending on the options chosen by the

caller.’’ Should this provision be

construed to cover situations where payper-call services charge different rates

for different time periods within a single

call (e.g., no charge for the first two

minutes after the end of the preamble,

$3.00 per minute for the third through

the eighth minutes, and $1 per minute

for every minute thereafter)?

(a) Assume for purposes of questions

22(a) and (b) that calls to such services

described above are ‘‘calls billed on a

variable rate basis’’ covered by Section

308.5(a)(2)(iii). Should that Section be

modified to require something other

than preamble disclosures of ‘‘the cost

of the initial portion of the call, any

minimum charges, and the range of rates

that may be charged depending on the

options chosen by the caller?’

(b) For example, in the scenario

described above, should Section

308.5(a)(2)(iii) explicitly require a

clearly discernible signal or tone to

mark the end of the free two-minute

period? Should it explicitly require a

clearly discernible signal or tone to

mark the end of the six-minute period

during which charges are $3.00 per

minute?

23. What percentage of 900-number

services fall into the category of

‘‘nominal cost calls’’ as described in

section 308.5(c) of the Rule?

(a) Do the data suggest that $2.00 is an

appropriate threshold for designation of

‘‘nominal cost calls’’ for which no

preamble is necessary? If not, what

‘‘nominal cost’’ threshold do the data

support?

(b) Should the ‘‘nominal cost’’ figure

be adjusted for inflation? Explain.

24. What percentage of callers to 900-

number services hang up the telephone

before the charges begin and how is this

ascertained?

(a) Of these, what percentage are first

time callers?

(b) Does this percentage correlate to

the cost of the call? To the nature of the

service?

25. What impact, if any, has the 900-

Number Rule had on the number of

complaints about, or requests for credits

or refunds for, calls to 900-number

services that allegedly were not

authorized by the subscriber of the

telephone line from which the calls

were placed?

(a) Has the percentage of such

complaints or requests increased,

decreased, or remained the same since

the Rule went into effect?

(b) What percentage of all requests for

credits or refunds of charges for 900-

number services involve calls allegedly

unauthorized by the telephone

subscriber?

(c) What percentage of these requests

are due to allegedly unauthorized calls

placed by minors?

26. What, if any, procedures are used

by industry to ensure that calls to

audiotext services are authorized by the

subscriber of the telephone line from

which the calls are placed?

(a) What, if any, procedures are used

by industry to minimize or eliminate

unauthorized calls placed by minors to

audiotext services?

(b) How effective have these

procedures been in reducing the number

of complaints or the number of requests

for credits or refunds regarding

allegedly unauthorized calls to

audiotext services?

27. What percentage of telephone

subscribers have chosen to block access

to 900 numbers from their telephone

lines?

(a) Of those choosing to block access

to 900 numbers, what percentage choose

to do so when initiating phone service?

(b) What percentage do so after phone

service has been initiated?

(c) Of the latter, what percentage have

done so after complaining about charges

to audiotext services?

(d) What percentage of consumers

who complain about charges for
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Proposed Rules 11755

audiotext services choose to block 900

numbers?

(e) To what extent, if any, has

blocking been effective in reducing

complaints involving 900-number

services?

(f) What, if any, are the costs to

consumers or industry of receiving or

providing 900 number blocking

services?

V. Billing and Collection

28. What services are provided to the

audiotext industry by billing entities

other than the telephone companies (or

‘‘alternative billing entities’’)?

(a) Do the types of services vary for

different types of audiotext services?

Explain.

(b) What percentage of audiotext

services are billed through billing

entities other than the telephone

companies? Explain.

(c) Have the types or number of these

alternative billing entities changed since

the Rule went into effect in 1993? What

impact, if any, has the Rule had on the

nature of these billing entities?

(d) What are the terms and conditions

of the arrangements between the

alternative billing entities and other

players in the audiotext industry?

(e) What is the role of a ‘‘billing

aggregator’’? What services does a

billing aggregator provide to members of

the audiotext industry?

29. Does the definition of ‘‘billing

error’’ in section 308.7 of the Rule

adequately reflect the range of billing

errors occurring in the 900-number

marketplace? If not, how might the

definition be changed?

30. Is there any evidence suggesting

that some (adult) consumers are refusing

to pay for audiotext calls or 900-number

calls which they purchased after hearing

a preamble containing the disclosure of

material information currently required

by the Rule?

(a) If such a problem exists, to what

extent is it affected by the dispute

resolution provisions of the 900-Number

Rule?

(b) If such a problem exists, to what

extent is it affected by the billing notice

requirements set forth in section

308.7(n)?

(c) What steps, if any, could the

Commission take to reduce the

incidence of this practice without

weakening protections afforded

consumers by TDDRA and the 900-

Number Rule?

31. Distinguished from billing for

unauthorized calls, the problem of

‘‘phantom billing’’ occurs when a

telephone subscriber is billed for an

audiotext call that the subscriber asserts

was never placed from the subscriber’s

telephone.

(a) How does phantom billing occur?

(b) What procedures and safeguards

currently exist or should exist to ensure

that telephone subscribers are billed

only for calls which were actually

placed from that subscriber’s phone?

(c) How does a billing entity

determine that billing tapes or other

records of calls are genuine?

(d) What percentage of consumers

who complain about ‘‘phantom billing’’

of audiotext services choose to block

access to 900 numbers?

32. Section 308.7(i) places restrictions

on the extent to which adverse credit

information can be reported to any

person.

(a) How, if at all, has this restriction

affected the creation of a shared

database of ‘‘problem callers’’ for the

purposes of blocking such persons from

900 or other audiotext transactions?

(b) Would such a database be useful

to industry?

(c) Does allowing such a shared

database adversely affect consumers? If

so, how?

33. How is ‘‘chargeback’’ defined by

the industry?

(a) Does the term include the situation

where a consumer has refused to pay for

an audiotext service? Does it include the

situation where a consumer pays and

then requests a refund?

(b) Are there data on chargeback rates

for the 900-number industry? For the

audiotext industry as a whole? Do the

data represent chargeback rates for all

types of ‘‘pay-per-call services’’ or only

for services provided through 900

numbers?

(c) How do the chargeback rates for

the pay-per-call industry compare with

other collection and payment systems,

such as the credit card collection and

payment system?

(d) What are the current and projected

future trends regarding chargeback rates

for the pay-per-call industry?

34. Do chargeback rates vary

according to the category of audiotext

service?

(a) Do the providers of some types of

services experience a greater chargeback

rate than other types of services? Are

there data demonstrating these

differences?

(b) If certain kinds of audiotext

services correlate with higher

chargeback rates, what is the

explanation for the correlation?

(c) Are there data to show whether

services that attract callers of certain age

groups (e.g., minors) are more likely

than others to result in chargebacks?

(d) How do chargeback rates for non900 audiotext services compare to rates

for 900 number services?

(e) How do chargeback rates for

nominally priced calls (i.e., those

exempted from the preamble

requirement) compare to the chargeback

rates for other calls?

35. Do chargeback rates vary

according to the payment method?

(a) Do services that utilize a credit

card billing system rather than an

Automatic Number Identification

(‘‘ANI’’) billing system experience fewer

chargebacks?

(b) What about services provided

according to oral presubscription

agreements?

(c) What about those services

provided according to written

presubscription agreements?

36. Has the advent of third party

billers affected the chargeback rates in

the audiotext industry? If so, how?

(a) Is there any correlation between

the type of billing entity (e.g., a local

exchange carrier or a third party biller)

and the rate of chargebacks? If so, why?

(b) Are chargeback rates affected by

the amount of time a billing entity gives

to a consumer to complain about a bill?

To what extent to different billing

entities follow the Rule’s time limits on

initiation of billing review?

Section G. Request for Comment

As discussed above, the

Telecommunications Act of 1996 gives

the Commission the authority to

conduct a rulemaking on the issue of

whether to ‘‘extend’’ the definition of

‘‘pay-per-call services’’ to cover other

services not currently covered by the

900-Number Rule. Thus, the

Commission currently seeks comment

on whether any expansion should be

made, and if so, how such an expansion

should be implemented. Commenters

should pay particular attention to the

fact that the Commission’s authority is

to extend the 900-Number Rule to cover

services which are ‘‘susceptible to the

unfair and deceptive trade practices that

are prohibited by [TDDRA].’’ Thus,

commenters should not limit

themselves to discussing services which

are currently associated with unfair and

deceptive practices; rather commenters

should discuss the broader topic of

services which are susceptible to

becoming havens for unfair and

deceptive practices addressed by

TDDRA. Commenters should attempt to

address the questions listed below:

1. Are there ‘‘audio information or

audio entertainment’’ (‘‘audiotext’’)

services which are not currently covered

by the definition of ‘‘pay-per-call

service,’’ but which are susceptible to

the same unfair and deceptive trade

practices prohibited by the current

Rule?
11756 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Proposed Rules

17FCC Pay-Per-Call Order and Notice, see supra

note 9.

(a) If so, should the Rule be amended

to cover these services?

(b) If so, how should the Rule be

changed?

(c) How would these changes affect

consumers and businesses?

(d) What characteristics of an

audiotext service make it susceptible to

the unfair and deceptive trade practices

prohibited by the current Rule?

2. How can a definition of ‘‘pay-percall service’’ be crafted so that audiotext

services which are susceptible to unfair

and deceptive trade practices are

covered by the Rule, but any services

that are not susceptible to these

practices are not swept into the Rule?

3. Should the Rule be extended to

cover any audiotext transaction where

an information provider or service

bureau receives a portion of the fees

paid by a caller? Explain.

4. Should the definition of ‘‘pay-percall service’’ be extended to encompass

international audiotext transactions

where the information provider or

service bureau receives a portion of the

fees paid by the caller? Explain. If so,

are there other modifications to the Rule

that would be necessitated by such a

change?

5. Are there technological differences

between 900-number and non-900-

number audiotext services that would

make it difficult to implement the Rule

in its current form with respect to non900-number audiotext services? Explain.

(a) For example, could free preambles

(as required by section 308.5) be

provided at the beginning of non-900-

number audiotext messages billed

through arrangements with international

long distance carriers? How could

accurate cost disclosures as required by

the Rule be made for these services?

(b) Must any changes be made to the

Rule to accommodate these differences?

(c) How would these suggested

changes affect audiotext services

utilizing 900 numbers?

6. In a Notice and Order 17, the

Federal Communications Commission

(FCC) stated that ‘‘regardless of whether

the FTC extends the scope of its payper-call regulations [pursuant to

§ 701(b)(2) of the Telecommunications

Act of 1996], our pay-per-call rules

continue to be delineated by the

statutory definition of pay-per-call

services contained in Section 228(i) of

the Communications Act.’’ Thus, if the

FTC extends the definition of ‘‘pay-percall services’’ pursuant to its authority

under the Telecommunications Act of

1996, then the two agencies would be

regulating the audiotext services

industry using two different definitions

of ‘‘pay-per-call services.’’

(a) What impact, if any, would this

result have on the audiotext industry?

(b) What could be done to reduce any

potential complications or conflicts?

Explain.

7. In light of the FCC’s

implementation of the

Telecommunications Act of 1996 as it

relates to the audiotext industry, are

there additional changes the FTC should

consider making to its own 900-Number

Rule?

8. Are there any audiotext services

currently being provided over the

Internet or commercial online services?

If not, is it likely that these services will

be available over the Internet or

commercial online services in the near

future? If yes, how do these services

work?

(a) Are there audiotext services

provided over the Internet that are

susceptible to the same unfair and

deceptive practices prohibited by the

current Rule? If so, should these

services be encompassed within an

expanded definition of ‘‘pay-per-call

services’’?

(b) What elements would a definition

have to include to encompass such

services?

(c) What are the costs and benefits to

including online services within the

scope of the 900-Number Rule?

(d) If such audiotext services provided

over the Internet or commercial online

services were included within an

expanded definition of this term, what,

if any, changes to the Rule’s provisions

would be necessary in order for the Rule

appropriately and effectively to prevent

unfair or deceptive practices in the

advertising, sale, and operation of such

services?

(e) How would preamble and other

Rule requirements be met for audiotext

numbers which are used to connect a

caller’s computer to the Internet or to

commercial online services?

9. What steps can a consumer take to

prevent his or her telephone line from

being used for unauthorized non-900-

number transactions such as

international audiotext transactions?

(a) Is call blocking of international

audiotext calls possible without

requiring the consumer to block access

to all international numbers?

(b) If not, what, if any, technology is

under development that would permit

selective blocking of particular

numbers, area codes or international

country codes?

10. What steps can a consumer take to

obtain a credit or refund if he or she

believes that there has been a billing

error or an unauthorized use of his or

her telephone for a non-900-number

audiotext transaction? What happens if,

for whatever reason, a consumer refuses

to pay for a non-900-number audiotext

call?

11. What was the gross sales revenue

generated in the non-900-number

audiotext industry for each year since

the promulgation of the Rule in 1993?

(a) What explains the emergence and

growth of non-900-number audiotext

services?

(b) What, if any, benefits do audiotext

services accessed through dialing

patterns other than ‘‘900’’ confer on

consumers or industry?

(c) How has the 900-number industry

been affected by audiotext services that

are not currently covered by FTC or FCC

regulations? Explain.

12. What categories of audiotext

services (e.g., sports, psychic, chat,

adult) are provided through non-900

audiotext numbers?

(a) What percentage does each type

constitute of all pay-per-call information

services accessed through dialing

patterns other than ‘‘900’’?

(b) What was the gross sales revenue

for each category in each year since

1993?

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 97–6299 Filed 3–11–97; 8:45 am]

BILLING CODE 6750–01–P