[Federal Register: January 5, 2005 (Volume 70, Number 3)]
[Rules and Regulations]
[Page 720-723]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05ja05-18]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[CC Docket No. 96-128; FCC 04-251]
The Pay Telephone Reclassification and Compensation Provisions of
the Telecommunications Act of 1996
AGENCY: Federal Communications Commission.
ACTION: Final rule; petitions for reconsideration.
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SUMMARY: By this document, we consider four petitions for
reconsideration of our Report and Order which established detailed
rules (the ``rules'' or ``Payphone Compensation Rules'') ensuring that
payphone service providers (PSPs) are ``fairly compensated'' for each
and every completed payphone-originated call. This Order on
Reconsideration does not change the compensation framework adopted last
year, but rather refines and builds upon its approach. The Commission
provides guidance on the types of contracts that it would deem to be
reasonable methods of compensating PSPs, extends the time period that
carriers must retain certain payphone records, and clarifies the rules'
reporting, certification, and audit requirements.
DATES: Effective January 5, 2005, except for Sec. 64.1310(g) which
contains information collection requirements that are not effective
until approved by the Office of Management and Budget. The Commission
will publish a document in the Federal Register announcing the
effective date of that section.
ADDRESSES: A copy of any comments on the Paperwork Reduction Act
information collection requirements contained herein should be
submitted to Judith B. Herman, Federal Communications Commission, Room
1-C804, 445 12th Street, SW., Washington, DC 20554, or via the Internet
to Judith-B.Herman@fcc.gov.
FOR FURTHER INFORMATION CONTACT: Darryl Cooper Attorney-Advisor,
Competition Policy Division, Wireline Competition Bureau, at (202) 418-
7131, or via the Internet at darryl.cooper@fcc.gov or Denise A. Coca,
Attorney-Advisor, Competition Policy Division, Wireline Competition
Bureau, at (202) 418-0574, or via the Internet at denise.coca@fcc.gov.
For additional information concerning the Paperwork Reduction Act
information collection requirements contained in this document, contact
Judith B. Herman at 202-418-0214, or via the Internet to
Judith-B.Herman@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order
on Reconsideration, CC Docket No. 96-128, FCC 04-251, adopted October
20, 2004, and released October 22, 2004. Filings and comments are also
available for public inspection and copying during regular business
hours at the FCC Reference Information Center, Portals II, 445 12th
Street, SW., Room CY-A257, Washington, DC, 20554. They may also be
purchased from the Commission's copy contractor, Best Copy and
Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC
20554, telephone 1 (800) 378-3160 or (202) 4880-5300, facsimile (202)
488-5563, or via e-mail at http://www.bcpiweb.com.
Synopsis of the Order on Reconsideration and the Report and Order
I. Introduction
1. In this Order on Reconsideration, we consider four petitions for
reconsideration of our Report and Order adopted on September 30, 2003,
which established detailed rules ensuring that PSPs are ``fairly
compensated'' for each and every completed payphone-originated call
(Implementation of the Pay Telephone Reclassification and Compensation
Provisions of the Telecommunications Act of 1996, CC Docket No. 96-128,
Report and Order, 68 FR 62751-01, (November 6, 2003)). This Order on
Reconsideration, released on October 22, 2004, does not change this
compensation framework, but rather refines and builds upon its
approach. In the Order on Reconsideration, the Commission provides
guidance on the types of contracts that it would deem to be reasonable
methods of compensating PSPs, extends the time period that carriers
must retain certain payphone records, and clarifies the rules'
reporting, certification, and audit requirements.
II. Background
2. The Report and Order held that the last facilities-based long
distance carrier in a call path--either an interexchange carrier (IXC)
or a switched-based reseller (SBR)--is responsible for compensating
PSPs. For local calls, where a local exchange carrier (LEC) completes a
call, that LEC is responsible for compensation. The Payphone
Compensation Rules define these responsible carriers as ``Completing
Carriers'' and require them to develop their own system of tracking
calls to completion, the accuracy of which must be confirmed and
attested to by a third party auditor. Completing Carriers are required
to compensate the PSPs on a quarterly basis for calls that are
completed on the Competing Carriers' platforms; to provide quarterly
reports to the PSPs; and their chief financial officers (CFOs) must
attest to the accuracy of the quarterly payment amount. The Payphone
Compensation Rules also imposed reporting requirements on an
``Intermediate Carrier,'' defined in the rules as ``a facilities-based
long distance carrier that switches payphone calls to other facilities-
based long distance carriers.'' Additionally, the Payphone Compensation
Rules also give parties flexibility to agree to alternative
compensation arrangements (ACA) so that small Completing Carriers may
avoid the expense of instituting a tracking system and undergoing an
audit.
III. Discussion
3. In the Order on Reconsideration, the Commission considers four
petitions for reconsideration filed in response to the Report and Order
in this docket. The Order on Reconsideration clarifies and modifies the
Report and Order by adopting the following changes: (1) Clarifying that
a Completing Carrier must give a PSP adequate notice of an ACA prior to
its effective date, with sufficient time for the PSP to object to an
ACA, and prior to the termination of an ACA; (2) clarifying that, in a
complaint proceeding under the Payphone Compensation Rules, a
Completing Carrier may assert as an affirmative defense that the PSP's
objection to an ACA was unreasonable; (3) clarifying that Completing
Carriers are required to report only completed calls in their quarterly
reports; (4) extending the time period that carriers must retain
certain payphone records, for dispute resolution purposes, from 18 to
27 months; (5) clarifying that quarterly reports should use industry
standard formats; (6) clarifying the responsibilities of LECs under the
Payphone Compensation Rules; (7) clarifying that a Completing Carrier
may post its System Audit Report and Sec. 64.1320(e) statement on its
website or on a clearinghouse's website, instead of transmitting these
documents to every PSP; (8) clarifying that a Completing Carrier's CFO
may issue a single blanket
[[Page 721]]
certification addressed to all PSPs to which the carrier owes
compensation, and such certification may be transmitted electronically
or posted on the web; and (9) clarifying that where a clearinghouse is
performing some of a Completing Carrier's compensation obligations, the
Completing Carrier's auditor may rely upon, under certain
circumstances, a third party's audit of the clearinghouse.
IV. Procedural Matters
4. Final Paperwork Reduction Act Analysis. This document contains
modified information collection requirements subject to the Paperwork
Reduction Act of 1995 (PRA), Public Law 104-13. It will be 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 new or modified information collection
requirements contained in this proceeding. In addition, we note that
pursuant to the Small Business Paperwork Relief Act of 2002, Public Law
107-198, see 44 U.S.C. 3506(c)(4), we previously sought specific
comment on how the Commission might ``further reduce the information
collection burden for small business concerns with fewer than 25
employees.''
5. In this present document, we have assessed the effects of
extending the time period that carriers must maintain verification
data. The amendment to Sec. 64.1310(g), which extends the time
carriers must maintain verification data from 18 to 27 months, will not
adversely affect businesses with fewer than 25 employees. This
amendment only requires carriers to maintain the data an additional 9
months and the cost and paperwork burden on carriers should be minimal.
Furthermore, the amendment to Sec. 64.1310(g) is in the public
interest because it will help to ensure that the data is available
throughout the statute of limitations period. We seek comment on this
amendment.
6. The Commission will send a copy of the Order on Reconsideration,
including a copy of this Final Regulatory Flexibility Certification, in
a report to Congress pursuant to the Congressional Review Act. In
addition, the Order on Reconsideration and this final certification
will be sent to the Chief Counsel for Advocacy of the SBA, and will be
published in the Federal Register.
7. Final Regulatory Flexibility Certification. The Regulatory
Flexibility Act of 1980, as amended (RFA), requires that a regulatory
flexibility analysis be prepared for notice-and-comment rulemaking
proceedings, unless the agency certifies that ``the rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities.'' The RFA generally defines the term ``small
entity'' as having the same meaning as the terms ``small business,''
``small organization,'' and ``small governmental jurisdiction.'' In
addition, the term ``small business'' has the same meaning as the term
``small business concern'' under the Small Business Act. A ``small
business concern'' is one which: (1) Is independently owned and
operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the Small Business
Administration (SBA).
8. As required by the RFA, an Initial Regulatory Flexibility
Analysis (IRFA) was incorporated in the Federal Register summary of the
Further Notice of Proposed Rulemaking (Implementation of the Pay
Telephone Reclassification and Compensation Provisions of the
Telecommunications Act of 1996, CC Docket No. 96-128, Further Notice of
Proposed Rulemaking, 68 FR 32720, (June 2, 2003)). The Commission
sought written public comments on the proposals in the FNPRM, including
comments on the IRFA. On September 30, 2003, the Commission adopted a
Report and Order that included a Final Regulatory Flexibility Analysis
(FRFA) that conformed to the RFA. In response to four petitions for
reconsideration of the Report and Order, the Commission adopted this
Order on Reconsideration.
9. In this Order on Reconsideration, the Commission clarifies its
payphone compensation rules in ways that will not have a significant
economic impact on a substantial number of small entities. As described
below, the Order on Reconsideration essentially refines and builds upon
the payphone compensation rules by clarifying certain ambiguities in
the rules and by decreasing certain administrative burdens on carriers.
10. Specifically, we clarify the conditions that a payphone service
provider (PSP) may impose on an alternative compensation arrangement
(ACA) between an interexchange carrier (IXC) and a switch-based
reseller (SBR). In the preceding Report and Order, the rules give
parties flexibility to agree to ACAs to avoid compliance with any or
all of the payphone compensation rules. However, in this Order on
Reconsideration, we clarify that an ACA may be posted on the web to
give PSPs adequate notice and time to object to the ACA. We also
clarify that notice of termination may be placed on the web. This way,
Completing Carriers will not be required to send a copy of the ACA and
seek affirmative consent from as many as 5500 PSPs. We believe that
these clarifications are merely administrative, and therefore the
result of the use of the web will be to confer benefits rather than
impose burdens on small SBRs. Therefore, these clarifications will not
have a significant economic impact on small entities.
11. Additionally, the record in this proceeding demonstrates that
PSPs might use their veto power over ACAs in a manner that would
unreasonably interfere with an SBR's ability to enter into ACAs. For
instance, demands by PSPs that an ACA contain a provision that forces
IXCs to assume ultimate responsibility for the payphone compensation
obligations of SBRs would undermine the Commission's determination in
the Report and Order that IXCs are not liable for such payphone
compensation. Such behavior would have the effect of deterring IXCs and
SBRs from entering into ACAs. Accordingly, to ensure a level playing
field for IXCs, SBRs, and PSPs, we clarify our rules to make clear that
PSPs do not hold unlimited veto power over an ACA. This Order on
Reconsideration therefore clarifies that, in a complaint proceeding
under the rules, a Completing Carrier may assert as an affirmative
defense that the PSP's objection to an ACA was unreasonable. We believe
this clarification confers a benefit on small SBRs by allowing them to
freely enter into ACAs, thereby avoiding the costs of maintaining a
tracking system as well as the costs of a large audit liability. Small
PSPs will not be burdened by this ACA procedure because they will
likely receive compensation for 100% of all payphone-originated calls,
regardless of whether they are completed. For these reasons, we believe
this clarification will not impose a significant economic impact on
small entities.
12. We also clarify that Completing Carriers are only required to
report completed payphone calls and not uncompleted calls or the
duration that a circuit is kept open for such calls. In the preceding
Report and Order, the Commission had already placed extensive
requirements on carriers to ensure that payment is based on accurate
data: they were obliged to create tracking systems, file System Audit
Reports, create a dispute resolution process, provide Completing and
Intermediate Carrier Reports, and have their chief financial officer
(CFO) certify their quarterly payments. With respect to uncompleted and
call duration, we find that the burden and
[[Page 722]]
cost to carriers to report this information outweigh any marginal,
additional benefit to PSPs. By not adding additional costly reporting
requirements on carriers, this clarification instead confers a benefit
on small SBRs. Since no additional costs are being incurred or
additional duties imposed on carriers, this clarification adopted in
this Order on Reconsideration will not have a significant economic
impact on small entities.
13. The rules also extend the data retention requirement for
completed call data from 18 months to 27 months, because the statute of
limitations for bringing lawsuits for payphone compensation is 24
months after the close of a calendar quarter, and because the PSPs need
access to this data. Although a number of small SBRs will have to
retain records for an additional 9 months, we believe the effect of
this revision will not be economically significant. Carriers were
already required to retain this data for 18 months under the rules we
adopted last year and therefore the effect of this change will be
minimal. As we explain in the Order on Reconsideration, no commenter
provided any data to support its position that it would unacceptably
increase the cost for small entities. Should there be a minor increase
in costs, that burden is outweighed by having the benefit of a more
efficient record-keeping system.
14. To encourage consistency between the various reports required
by the payphone compensation rules, we also clarify that carriers
should follow one of the standard industry formats established by
national clearinghouses. In this Order on Reconsideration, we do not
require carriers to follow a particular format because we believe that
it is neither appropriate nor necessary for the Commission to make up a
format. Furthermore, parties did not quantify the cost to update the
reports. In the event a small SBR decides to update the reports to meet
industry standards, we believe the cost to do so will be minimal and
therefore this clarification will not have a significant economic
impact on small entities.
15. Similarly, the Commission's clarification concerning the
responsibilities of local exchange carriers (LECs) as Completing
Carriers does not significantly impact small entities. This
clarification addresses a concern that some LECs who pay PSPs through
bill credits are not compensating PSPs when a PSP is not served by the
LEC or when the LEC acts as an IXC. In this Order on Reconsideration,
we simply clarify that a LEC is responsible for compensation for calls
made to access code numbers or subscriber toll-free numbers that a LEC
maintains. We do not impose any additional responsibilities on LECs and
therefore the clarification will not have a significant economic impact
on small entities.
16. This Order on Reconsideration further clarifies and removes
potentially burdensome paperwork requirements allowing the use of
electronic methods to comply with our audit and CFO reporting
requirements. First, we clarify that system audit reports may be posted
on a website instead of requiring them to be sent to as many as 5500
PSPs. Second, these rules also clarify that a Completing Carrier CFO
may certify the carrier's quarterly payments to all PSPs in a single
document and may post this certification on the web, instead of sending
individualized certifications to PSPs. The Commission believes that
complying with the rules electronically is no more burdensome than
submitting copies. It will also be less expensive for carriers to post
the reports and certifications on the web rather than to send paper
copies to PSPs. Therefore, these clarifications will not have a
significant economic impact on small entities.
17. We also clarify that SBRs and other Completing Carriers may
rely on a system audit of a payphone clearinghouse (instead of re-
auditing the clearinghouse themselves). We expect that this
clarification will benefit small SBRs economically because they will
not have to pay for a separate audit of the clearinghouse.
18. Therefore, we certify that the requirements of the Order on
Reconsideration will not have a significant economic impact on a
substantial number of small entities.
Ordering Clauses
19. Accordingly, pursuant to authority contained in sections 1, 4,
and 276 of the Communications Act of 1934, as amended, 47 U.S.C. 151,
154, and 276, it is ordered that the policies, rules, and requirements
set forth herein are adopted.
20. It is further ordered that part 64 of the Commission's rules,
47 CFR part 64, is amended by revising Sec. 64.1310(a) and (g), and
Sec. 64.1320(a), (b), and (e) as set forth in Appendix B to this Order
on Reconsideration.
21. It is further ordered that the Petition for Clarification or
Partial Reconsideration filed by APCC is granted in part and denied in
part, to the extent discussed herein.
22. It is further ordered that the petition for Clarification or,
in the Alternative, Reconsideration filed by AT&T is granted, to the
extent discussed herein.
23. It is further ordered that the Petition for Reconsideration and
Clarification filed by the RBOC Coalition is denied.
24. It is further ordered that the Petition for Reconsideration
filed by Sprint is denied.
25. It is further ordered that the Request for Stay filed by APCC
is denied as moot.
26. It is further ordered that for good cause found, the rules set
forth in Appendix B are effective January 5, 2005, except for Sec.
64.1310(g) which contains information collection requirements that are
not effective until approved by the Office of Management and Budget.
The Commission will publish a document in the Federal Register
announcing the effective date of that section.
27. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Order on Reconsideration, including the Final Regulatory
Flexibility Certification, to the Chief Counsel for Advocacy of the
Small Business Administration.
List of Subjects in 47 CFR Part 64
Telephone, Telecommunications.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Final Rules
0
For the reasons discussed in the preamble, the Federal Communications
Commission amends 47 CFR part 64 as follows:
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
0
1. The authority citation for part 64 continues to read as follows:
Authority: 47 U.S.C. 154, 254(k); secs. 403(b)(2)(B), (c),
Public Law 104-104, 110 Stat. 56. Interpret or apply 47 U.S.C. 201,
218, 225, 226, 228, and 254(k) unless otherwise noted.
0
2. Section 64.1310 is amended by revising paragraphs (a) introductory
text, (a)(3), (a)(4)(i) and paragraph (g) to read as follows:
Sec. 64.1310 Payphone compensation procedures.
(a) Unless the payphone service provider consents to an alternative
compensation arrangement, each Completing Carrier identified in Sec.
64.1300(a) shall compensate the payphone service provider in
[[Page 723]]
accordance with paragraphs (a)(1) through (a)(4) of this section. A
payphone service provider may not unreasonably withhold its consent to
an alternative compensation arrangement.
* * * * *
(3) When payphone compensation is tendered for a quarter, the chief
financial officer of the Completing Carrier shall submit to each
payphone service provider to which compensation is tendered a sworn
statement that the payment amount for that quarter is accurate and is
based on 100% of all completed calls that originated from that payphone
service provider's payphones. Instead of transmitting individualized
statements to each payphone service provider, a Completing Carrier may
provide a single, blanket sworn statement addressed to all payphone
service providers to which compensation is tendered for that quarter
and may notify the payphone service providers of the sworn statement
through any electronic method, including transmitting the sworn
statement with the Sec. 64.1310(a)(4) quarterly report, or posting the
sworn statement on the Completing Carrier or clearinghouse website. If
a Completing Carrier chooses to post the sworn statement on its
website, the Completing Carrier shall state in its Sec. 64.1310(a)(4)
quarterly report the web address of the sworn statement.
(4) * * *
(i) A list of the toll-free and access numbers dialed and completed
by the Completing Carrier from each of that payphone service provider's
payphones and the ANI for each payphone;
* * * * *
(g) Each Completing Carrier and each Intermediate Carrier must
maintain verification data to support the quarterly reports submitted
pursuant to paragraphs (a)(4) and (c) of this section for 27 months
after the close of that quarter. This data must include the time and
date that each call identified in paragraphs (a)(4) and (c) of this
section was made. This data must be provided to the payphone service
provider upon request.
0
3. Section 64.1320 is amended by revising paragraphs (a), (b), and (e)
to read as follows:
Sec. 64.1320 Payphone call tracking system audits.
(a) Unless it has entered into an alternative compensation
arrangement pursuant to Sec. 64.1310(a) that relieves it of its Sec.
64.1310(a)(1) tracking system obligation, each Completing Carrier must
undergo an audit of its Sec. 64.1310(a)(1) tracking system by an
independent third party auditor whose responsibility shall be, using
audit methods approved by the American Institute for Certified Public
Accountants, to determine whether the call tracking system accurately
tracks payphone calls to completion.
(b) By the effective date of these rules, each Completing Carrier
in paragraph (a) of this section must file an audit report from the
auditor (the ``System Audit Report'') regarding the Completing
Carrier's compliance with Sec. 64.1310(a)(1) as of the date of the
audit:
(1) With the Commission's Secretary in CC Docket No. 96-128;
(2) With each payphone service provider for which it completes
calls and a Completing Carrier may comply with this paragraph's
requirement to file copies of the System Audit Report with each
payphone service provider by posting the System Audit Report on its
website or a clearinghouse website; and
(3) With each facilities-based long distance carrier from which it
receives payphone calls.
* * * * *
(e) At the time of filing of a System Audit Report with the
Commission, the Completing Carrier shall file with the Commission's
Secretary, the payphone service providers and the facilities-based long
distance carriers identified in paragraph (b) of this section, a
statement that includes the name of the Completing Carrier, and the
name, address and phone number for the person or persons responsible
for handling the Completing Carrier's payphone compensation and for
resolving disputes with payphone service providers over compensation,
and this statement shall be updated within 60 days of any changes of
such persons. If a Completing Carrier chooses to notify payphone
service providers of this statement and its System Audit Report by
posting these two documents on its website or a clearinghouse website,
then this statement shall include the web address for these two
documents.
* * * * *
[FR Doc. 05-173 Filed 1-4-05; 8:45 am]
BILLING CODE 6712-01-P