[Federal Register Volume 77, Number 101 (Thursday, May 24, 2012)]
[Proposed Rules]
[Pages 30972-30976]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12670]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CG Docket Nos. 11-116 and 09-158; CC Docket No. 98-170; FCC 12-42]


Empowering Consumers to Prevent and Detect Billing for 
Unauthorized Charges (``Cramming''); Consumer Information and 
Disclosure; Truth-in-Billing Format

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission or FCC) proposes additional rules to help consumers prevent 
and detect the placement of unauthorized charges on their telephone 
bills, an unlawful and fraudulent practice commonly referred to as 
``cramming.'' Several commenters in this proceeding support additional 
measures to prevent cramming, including requiring wireline carriers to 
obtain a consumer's affirmative consent before placing third-party 
charges on telephone bills (i.e. ``opt-in''). There also is support for 
adopting anti-cramming rules for Commercial Mobile Radio Service (CMRS) 
and Voice over Internet Protocol (VoIP) service. The Commission seeks 
further comment on whether it should take additional steps to prevent 
wireline cramming, including ``opt-in'', possible solutions to CMRS 
cramming, and any developments of VoIP cramming.

DATES: Interested parties may file comments on or before June 25, 2012, 
and reply comments on or before July 9, 2012.

ADDRESSES: You may submit comments, identified by CG Docket No. 11-116, 
by any of the following methods:
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the Commission's Electronic Comment 
Filing System (ECFS), through the Commission's Web site http://fjallfoss.fcc.gov/ecfs2/. Filers should follow the instructions 
provided on the Web site for submitting comments. For ECFS filers, in 
completing the transmittal screen, filers should include their full 
name, U.S. Postal service mailing address, and CG Docket No. 11-116.
     Paper filers: Parties who choose to file by paper must 
file an original and four copies of each filing. Filings can be sent by 
hand or messenger delivery, by commercial overnight courier, or by 
first-class or overnight U.S. Postal Service mail (although the 
Commission

[[Page 30973]]

continues to experience delays in receiving U.S. Postal Service mail). 
All filings must be addressed to the Commission's Secretary, Office of 
the Secretary, Federal Communications Commission
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St., SW., Room TW-A325, Washington, DC 20554. All hand 
deliveries must be held together with rubber bands or fasteners. Any 
envelopes must be disposed of before entering the building.
     Commercial Mail sent by overnight mail (other than U.S. 
Postal Service Express Mail and Priority Mail) must be sent to 9300 
East Hampton Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail should be addressed to 445 12th Street SW., Washington, DC 20554.
    [ssquf] In addition, parties must serve one copy of each pleading 
with the Commission's duplicating contractor, Best Copy and Printing, 
Inc., 445 12th Street SW., Room CY-B402, Washington, DC 20554, or via 
email to fcc@bcpiweb.com.

For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Lynn Ratnavale, Lynn.Ratnavale@fcc.gov 
or (202) 418-1514, or Melissa Conway, Melissa.Conway@fcc.gov or (202) 
418-2887, of the Consumer and Governmental Affairs Bureau, Consumer 
Policy Division.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Further Notice of Proposed Rulemaking (FNPRM), FCC 12-42, adopted on 
April 27, 2012, and released on April 27, 2012, in CG Docket Nos. 11-
116 and 09-158, and CC Docket No. 98-170. Simultaneously with the 
FNPRM, the Commission also issued a Report and Order in CG Docket Nos. 
11-116 and 09-158, and CC Docket No. 98-170. The full text of the FNPRM 
and copies of any subsequently filed documents in this matter may also 
be purchased from the Commission's duplicating contractor, Best Copy 
and Printing, Inc., Portals II, 445 12th Street SW., Room CY-B402, 
Washington, DC 20554. Customers may contact the Commission's 
duplication contractor at its Web site, www.bcpiweb.com, or by calling 
(202) 488-5300. Document can also be downloaded in Word or Portable 
Document Format (PDF) at http://www.fcc.gov/guides/cramming-unauthorized-misleading-or-deceptive-charges-placed-your-telephone-bill.
    Pursuant to 47 CFR 1.1200 et seq., this matter shall be treated as 
a ``permit-but-disclose'' proceeding in accordance with the 
Commission's ex parte rules. Persons making ex parte presentations must 
file a copy of any written presentation or a memorandum summarizing any 
oral presentation within two business days after the presentation 
(unless a different deadline applicable to the Sunshine period 
applies). Persons making oral ex parte presentations are reminded that 
memoranda summarizing the presentation must: (1) List all persons 
attending or otherwise participating in the meeting at which the ex 
parte presentation was made; and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with section 1.1206(b) of the Commission's rules. 
In proceedings governed by section 1.49(f) or for which the Commission 
has made available a method of electronic filing, written ex parte 
presentations and memoranda summarizing oral ex parte presentations, 
and all attachments thereto, must be filed through the electronic 
comment filing system available for that proceeding, and must be filed 
in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). 
Participants in this proceeding should familiarize themselves with the 
Commission's ex parte rules.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (Braille, large print, electronic 
files, audio format), send an email to fcc504@fcc.gov or call the 
Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), 
(202) 418-0432 (TTY).

Initial Paperwork Reduction Act of 1995

    The FNPRM seeks comment on potential new information collection 
requirements. If the Commission adopts any new information collection 
requirement, the Commission will publish another notice in the Federal 
Register inviting the public to comment on the requirements, as 
required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 
U.S.C 3501-3520). In addition, pursuant to the Small Business Paperwork 
Relief Act of 2002, the Commission seeks comment on how it might 
``further reduce the information collection burden for small business 
concerns with fewer than 25 employees.''

Synopsis

    1. In the FNPRM, the Commission seeks comment on additional 
potential measures to prevent cramming, including an ``opt-in'' 
requirement for wireline carriers. The FNPRM also seeks comment on 
possible solutions to CMRS cramming and any developments on VoIP 
cramming.
    2. The record reflects significant concern that bill formatting 
changes and greater transparency alone are not sufficient to deter the 
widespread problem of cramming. Commenters suggest a number of stronger 
measures, such as prohibiting all or most third-party charges from 
being placed on telephone bills or requiring carriers to obtain a 
consumer's affirmative consent before placing third-party charges on 
their own bills to consumers (``opt-in''). Consumer groups argue that a 
requirement for consumer consent or an affirmative opt-in to receive 
third-party charges should apply to consumers' wireline, VoIP, and/or 
CMRS bills and that any requirement to separate third-party charges on 
the bills of those consumers who opt-in should apply across all 
platforms. The Commission seeks additional comment on whether it should 
adopt additional measures, such as an opt-in approach, and, if so, the 
best way to implement them. To adequately evaluate an opt-in approach, 
a more detailed record is needed, especially with respect to the 
structure and mechanics of an opt-in approach and how opt-in could be 
implemented for existing consumers whose carrier already may be placing 
non-carrier third-party charges on their telephone bills. The 
Commission also seeks to bolster the record with respect to its 
authority to adopt additional anti-cramming measures.
    3. The Commission seeks additional comment on whether an ``opt-in'' 
approach is warranted and how it should be structured. Should an opt-in 
requirement apply only to new consumers or to all consumers? If ``opt-
in'' should only apply to new

[[Page 30974]]

consumers or some other subset of existing consumers, then what is the 
basis--both factual and legal--for such a distinction? What are the 
distinguishing characteristics of each subset of consumers and their 
respective risk of being crammed that may justify disparate treatment? 
Should an opt-in requirement, if adopted, apply to all third-party 
charges or should third-party charges for telecommunications services 
be exempt? Should the exemption apply to all third-party 
telecommunications services? Would consumers likely benefit from an 
``opt-in'' mechanism with respect to non-telecommunications-related 
third-party charges? Would consumers adequately anticipate the need for 
third-party billing before they opt-in or opt-out? Are there any 
analogous opt-in requirements that might inform our decisions here? 
Would the benefits to consumers be different under one opt-in structure 
versus another? Would an opt-in approach be more or less warranted if 
it applied only to new consumers?
    4. Assuming the Commission decides to adopt an ``opt-in'' approach, 
the secondary set of issues revolves around how an ``opt-in'' measure 
should be implemented from a practical standpoint. Should the 
Commission adopt an all-or-nothing opt-in where the consumer has an 
opportunity to opt-in or reject all third-party charges, including long 
distance carrier charges? Should the consumer have the choice to opt-in 
or reject carrier and non-carrier charges separately, or should the 
consumer have an opportunity to indicate that they choose not to 
receive third-party billing charges unless or until they are consulted 
about specific individual charges from third parties?
    5. With respect to procedure, there is the question of the best 
format for implementing the ``opt-in'' mechanism. What would be the 
best procedures to obtain a consumer's opt-in to third-party charges?
    6. The Commission seeks comment on the specific costs of the 
measures discussed in the FNPRM, and ways the Commission might mitigate 
any implementation costs. Do smaller wireline carriers face unique 
implementation costs and, if so, how might we address those concerns?
    7. The Commission also seeks comment on where and when a consumer 
should be made aware of the opportunity to opt-in to third-party 
billing charges. Should carriers inform consumers at the point of sale, 
such as during the telephone conversation between the consumer and the 
carrier's customer service representative or while using online sign-up 
procedures? Should notification of the option to opt-in also appear in 
Web site, print, or in-store advertising? Should existing consumers be 
informed on their bills? Should the consumer's current opt-in status be 
disclosed on every bill so that he or she will know whether to be 
looking for such charges on that bill? The Commission seeks comment 
regarding the duration of each opt-in approval and what happens when a 
consumer decides to revoke a prior opt-in approval or to give new opt-
in approval. What procedures should be required for a consumer to 
change an opt-in election? Should a consumer be able to opt-in to 
specific types of third-party charges, from a specific third party, or 
for a specific period of time? Do carriers have the technical ability 
to distinguish such charges today and, if not, what would be the cost 
to obtain that ability? The Commission seeks comment on the level of 
consumer interest in this type of ``opt-in'' approach, the potential 
consumer benefits, as well as the complexity and costs such a scenario 
poses for carriers.
    8. Are there additional measures the Commission could take to 
combat cramming? Are there measures beyond an ``opt-in'' approach or 
alternative approaches that we should consider and might be more 
effective at combating cramming?
    9. Cramming appears to be less a problem for CMRS consumers than 
for wireline consumers, but it may be on the rise. The Commission seeks 
comment on potential regulatory and non-regulatory measures to address 
the issue. Are there technological solutions that might help consumers, 
such as apps for mobile phones? What steps has industry taken to date 
and what steps might it take in the future to protect CMRS consumers? 
Are there any steps the Commission should consider to help CMRS 
consumers combat cramming? To the extent that cramming issues develop 
for VoIP services, the Commission seeks comment about that issue and 
answers to the above questions. The Commission requests that commenters 
address implementation costs of any other proposed anti-cramming 
measures and any questions of legal authority.
    10. The Commission seeks comment on the respective roles of 
carriers and billing aggregators in screening charges for purposes of 
existing blocking options and how these roles might change if the 
Commission adopts an ``opt-in'' requirement.
    11. The Commission seeks comment on its authority to adopt an 
``opt-in'' requirement. Would the Commission's section 201(b) authority 
to regulate practices ``for and in connection with'' telecommunications 
services support such requirements? Does the Commission's Title I 
ancillary authority provide support for such requirements? Are there 
other sources of authority? Would such measures present First Amendment 
concerns, and, if so, how might the Commission address those concerns?

Initial Regulatory Flexibility Act Analysis

    12. As required by section 603 of the Regulatory Flexibility Act of 
1980, as amended (RFA), the Commission has prepared an Initial 
Regulatory Flexibility Analysis (IRFA) of the possible significant 
economic impact on a substantial number of small entities by the 
policies and rules proposed in the FNPRM. Written public comments are 
requested on the IRFA. Comments must be identified as responses to the 
IRFA and must be filed by the deadlines indicated in the DATES section 
of this document. The Commission will send a copy of the FNPRM, 
including this IRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration.

Need for, and Objectives of, the Proposed Rules

    13. The FNPRM contains proposals that: (1) A carrier, if it already 
offers blocking, ask all new subscribers whether they would like to 
``opt-in'' to blocking of third-party charges on their bills and record 
the subscriber's election for purposes of blocking or not blocking 
third-party charges on that subscriber's bill; and (2) carriers that 
already offer blocking include on all telephone bills and on their Web 
sites for use by existing customers, information about the option to 
block third-party charges from their telephone bills and record any 
subsequent request by a current customer to block or not block third-
party charges on that subscriber's bill.
    14. The record reflects that cramming primarily has been an issue 
for wireline telephone consumers. The rules adopted in the Report and 
Order do not address aspects of cramming which are being considered in 
the FNPRM, including growth in CMRS cramming and how the Commission 
should address any cramming issues that develop for VoIP services. 
Adopting further requirements will provide consumers with additional 
safeguards.

Legal Basis

    15. The legal basis for any action that may be taken pursuant to 
the FNPRM is contained in sections 1-2, 4, 201, 258, and 403 of the 
Communications Act of 1934, as amended 47 U.S.C. 151-152, 154, 201, 
258, and 403.

[[Page 30975]]

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

    16. The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that will be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. 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. Nationwide, there are a total of approximately 
29.6 million small businesses, according to the SBA. The FNPRM seeks 
comment generally on mobile providers of voice, text, and data 
services. However, as noted in Section IV of the FNPRM, the Commission 
seeks comment on the scope of entities that should be covered by the 
proposals contained therein.
    17. Incumbent Local Exchange Carriers (``Incumbent LECs''). Neither 
the Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. Census Bureau data for 
2007, which now supersede data from the 2002 Census, show that there 
were 3,188 firms in this category that operated for the entire year. Of 
this total, 3,144 had employment of 999 or fewer, and 44 firms had had 
employment of 1000 or more. According to Commission data, 1,307 
carriers reported that they were incumbent local exchange service 
providers. Of these 1,307 carriers, an estimated 1,006 have 1,500 or 
fewer employees and 301 have more than 1,500 employees. Consequently, 
the Commission estimates that most providers of local exchange service 
are small entities that may be affected by the adopted rules and 
policies. Thus, under this category and the associated small business 
size standard, the majority of these incumbent local exchange service 
providers can be considered small.
    18. Competitive Local Exchange Carriers (``Competitive LECs''), 
Competitive Access Providers (``CAPs''), Shared-Tenant Service 
Providers, and Other Local Service Providers. Neither the Commission 
nor the SBA has developed a small business size standard specifically 
for these service providers. The appropriate size standard under SBA 
rules is for the category Wired Telecommunications Carriers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Census Bureau data for 2007, which now supersede data from 
the 2002 Census, show that there were 3,188 firms in this category that 
operated for the entire year.
    19. Of this total, 3,144 had employment of 999 or fewer, and 44 
firms had had employment of 1,000 employees or more. Thus under this 
category and the associated small business size standard, the majority 
of these Competitive LECs, CAPs, Shared-Tenant Service Providers, and 
Other Local Service Providers can be considered small entities. 
According to Commission data, 1,442 carriers reported that they were 
engaged in the provision of either competitive local exchange services 
or competitive access provider services. Of these 1,442 carriers, an 
estimated 1,256 have 1,500 or fewer employees and 186 have more than 
1,500 employees. In addition, 17 carriers have reported that they are 
Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 
or fewer employees. In addition, 72 carriers have reported that they 
are Other Local Service Providers. Of the 72, seventy have 1,500 or 
fewer employees and two have more than 1,500 employees. Consequently, 
the Commission estimates that most providers of competitive local 
exchange service, competitive access providers, Shared-Tenant Service 
Providers, and Other Local Service Providers are small entities that 
may be affected by the adopted rules.
    20. Interexchange Carriers. Neither the Commission nor the SBA has 
developed a small business size standard specifically for providers of 
interexchange services. The appropriate size standard under SBA rules 
is for the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
Census Bureau data for 2007, which now supersede data from the 2002 
Census, show that there were 3,188 firms in this category that operated 
for the entire year. Of this total, 3,144 had employment of 999 or 
fewer, and 44 firms had had employment of 1,000 employees or more. Thus 
under this category and the associated small business size standard, 
the majority of these Interexchange carriers can be considered small 
entities. According to Commission data, 359 companies reported that 
their primary telecommunications service activity was the provision of 
interexchange services. Of these 359 companies, an estimated 317 have 
1,500 or fewer employees and 42 have more than 1,500 employees. 
Consequently, the Commission estimates that the majority of 
interexchange service providers are small entities that may be affected 
by rules adopted pursuant to the FNPRM.
    21. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to that time, such firms were 
within the now-superseded categories of ``Paging'' and ``Cellular and 
Other Wireless Telecommunications.'' Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. For the category of Wireless 
Telecommunications Carriers (except Satellite), Census data for 2007 
show that there were 1,383 firms that operated that year. Of those, 
1,368 firms had fewer than 100 employees, and 15 firms had more than 
100 employees. Thus, under this category and the associated small 
business size standard, the majority of firms can be considered small. 
Similarly, according to Commission data, 413 carriers reported that 
they were engaged in the provision of wireless telephony, including 
cellular service, Personal Communications Service (PCS), and 
Specialized Mobile Radio (SMR) telephony services. An estimated 261 of 
these firms have 1,500 or fewer employees and 152 firms have more than 
1,500 employees. Consequently, the Commission estimates that 
approximately half or more of these firms can be considered small. 
Thus, using available data, the Commission estimates that the majority 
of wireless firms are small.
    22. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. As noted, the SBA has developed a small business 
size standard for Wireless Telecommunications Carriers (except 
Satellite). Under the SBA small business size standard, a business is 
small if it has 1,500 or fewer employees.
    23. According to Commission data, 434 carriers report that they are 
engaged in wireless telephony. Of these, an estimated 222 have 1,500 or 
fewer employees, and 212 have more than 1,500 employees. Therefore, the 
Commission estimates that 222 of these entities can be considered 
small.

[[Page 30976]]

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    24. The FNPRM contains proposals that: (1) A carrier, if it already 
offers blocking, ask all new subscribers whether they would like to 
``opt-in'' to blocking of third-party charges on their bills and record 
the subscriber's election for purposes of blocking or not blocking 
third-party charges on that subscriber's bill; and (2) carriers that 
already offer blocking include on all telephone bills and on their Web 
sites for use by existing customers, information about the option to 
block third-party charges from their telephone bills and record any 
subsequent request by a current customer to block or not block third-
party charges on that subscriber's bill.
    25. These proposed rules may necessitate that some carriers make 
changes to their existing billing formats and/or disclosure materials 
which would impose some additional costs to carriers. However, some 
carriers may already be in compliance with many of these requirements 
and therefore, no additional compliance efforts will be required.

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

    26. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): (1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    27. Any economic burden these proposed rules may have on carriers 
is outweighed by the benefits to consumers. However, in the FNPRM, the 
Commission specifically asks how to minimize the economic impact of our 
proposals. For instance, the Commission seeks comment on the specific 
costs of the measures discussed in the FNPRM, and ways the Commission 
might mitigate any implementation costs. The Commission also 
particularly asks whether smaller carriers face unique implementation 
costs and, if so, how the Commission might address those concerns. In 
addition, for example, the Commission seeks comment on alternatives for 
how a carrier should obtain a consumer's opt-in to third-party charges, 
if the Commission decides to adopt an ``opt-in'' approach. Finally, the 
Commission seeks comment on the overall economic impact these proposed 
rules may have on carriers because it seeks to minimize all costs 
associated with these proposed rules.

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

    28. None.

Ordering Clauses

    29. Pursuant to the authority contained in sections 1-2, 4, 201, 
and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151-
152, 154, 201, and 403, the FNPRM is adopted.
    30. The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of the FNPRM, including 
the IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2012-12670 Filed 5-23-12; 8:45 am]
BILLING CODE 6712-01-P