*Pages 1--4 from Microsoft Word - 5540.doc* Federal Communications Commission DA 00- 2827 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of Implementation of the Subscriber Carrier Selection Changes Provisions of the Telecommunications Act of 1996 Primus Telecommunications, Inc. Petition for Waiver ) ) ) ) ) ) ) ) ) CC Docket No. 94- 129 ORDER Adopted: December 14, 2000 Released: December 15, 2000 By the Associate Chief, Accounting Policy Division, Common Carrier Bureau: I. INTRODUCTION AND BACKGROUND 1. In its Carrier Change Orders, 1 the Commission adopted rules applicable to carriers changing a consumer's preferred carrier. 2 In this Order, we grant Primus Telecommunications, Inc. (Primus) a limited waiver of the authorization and verification requirements of the Commission's rules and Carrier Change Orders. 3 We grant this limited 1 Implementation of the Subscriber Carrier Selection Changes Provisions of the Telecommunications Act of 1996 and Policies and Rules Concerning Unauthorized Changes of Consumers' Long Distance Carriers, CC Docket No. 94- 129, Further Notice of Proposed Rule Making and Memorandum Opinion and Order on Reconsideration, 12 FCC Rcd 10674 (1997), Second Report and Order and Further Notice of Proposed Rule Making, 14 FCC Rcd 1508 (1998) (Section 258 Order); stayed in part, MCI WorldCom v. FCC, No. 99- 1125 (D. C. Cir. May 18, 1999); First Order on Reconsideration, 15 FCC Rcd 8158, 65 Fed. Reg. 47678 (August 3, 2000); stay lifted, MCI WorldCom v. FCC, No. 99- 1125 (D. C. Cir. June 27, 2000); Third Report and Order and Second Order on Reconsideration, 15 FCC Rcd 15966; reconsideration pending; Policies and Rules Concerning Unauthorized Changes of Consumers' Long Distance Carriers, CC Docket No. 94- 129, Report and Order, 10 FCC Rcd 9560 (1995), stayed in part, 11 FCC Rcd 856 (1995); Policies and Rules Concerning Changing Long Distance Carriers, CC Docket No. 91- 64, 7 FCC Rcd 1038 (1992), reconsideration denied, 8 FCC Rcd 3215 (1993) (PIC Change Recon. Order); Investigation of Access and Divestiture Related Tariffs, CC Docket No. 83-1145, Phase I, 101 F. C. C. 2d 911 (Allocation Order), 101 F. C. C. 2d 935 (Waiver Order), reconsideration denied, 102 F. C. C. 2d 503 (1985) (Reconsideration Order) (the Reconsideration Order denied reconsideration of both the Allocation Order and the Waiver Order). We refer to these orders collectively as the Carrier Change Orders. 2 47 C. F. R. §§ 64.1100 - 64.1190. 3 On November 17, 2000, Primus Telecommunications, Inc. filed a Petition for Waiver (Waiver Petition) relating to its acquisition of the customer base of Network International, L. C. (Network International). On December 8, 2000, Primus supplemented its Waiver Petition (Supplement) with additional information in support of its request for waiver of the Commission’s authorization and verification rules. 1 Federal Communications Commission DA 00- 2827 2 waiver to the extent necessary to enable Primus to become the preferred carrier of certain consumers currently presubscribed to Network International, without first obtaining the consumers’ authorization and verification. 2. Section 258 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, makes it unlawful for any telecommunications carrier to "submit or execute a change in a subscriber's selection of a provider of telephone exchange service or telephone toll service except in accordance with such procedures as the Commission shall prescribe." 4 The goal of section 258 is to eliminate the practice of "slamming," the unauthorized change of a subscriber's preferred carrier. Pursuant to section 258, carriers are absolutely barred from changing a customer's preferred local or long distance carrier without first complying with the Commission's verification procedures. 5 In the Section 258 Order, the Commission revised its procedures to ensure that carriers obtain the requisite authority prior to changing a customer's preferred carrier. The Commission requires that carriers follow one of the Commission's prescribed verification procedures before submitting carrier changes on behalf of consumers. 6 3. Primus seeks a waiver of our verification rules to allow Primus to be designated the preferred long distance carrier for the customers of Network International without first obtaining each customer’s authorization and verification. Because we conclude that, under the circumstances presented, it is in the public interest to grant the waiver, we grant Primus a waiver, subject to the conditions represented in its filings. II. DISCUSSION 4. Generally, the Commission’s rules may be waived for good cause shown. 7 As noted by the Court of Appeals for the D. C. Circuit, however, agency rules are presumed valid. 8 The Commission may exercise its discretion to waive a rule where the particular facts make strict compliance inconsistent with the public interest. 9 In addition, the Commission may take into account considerations of hardship, equity, or more effective implementation of overall policy on 4 47 U. S. C. § 258. 5 The Commission's rules and orders clearly contemplate that a switchless reseller may be a customer's preferred carrier. Therefore, changes to a customer's preferred carrier that do not involve a change in the customer's underlying facilities- based carrier are nonetheless subject to the Commission's authorization and verification rules. See Section 258 Order at paras. 145- 146; WATS International Corp. v. Group Long Distance (USA), Inc., 12 FCC Rcd 1743, 1752 (1997) (citing PIC Change Recon. Order, 8 FCC Rcd at 3218). 6 Pursuant to these procedures, a carrier must: (1) obtain the subscriber's written authorization; (2) obtain confirmation from the subscriber via a toll- free number provided exclusively for the purpose of confirming orders electronically; or (3) utilize an independent third party to verify the subscriber's order. See 47 C. F. R. § 64.1120( c). 7 47 C. F. R. § 1.3. 8 WAIT Radio v. FCC, 418 F. 2d 1153, 1157 (D. C. Cir. 1969), cert. denied, 409 U. S. 1027 (1972). 9 Northeast Cellular Telephone Co. v. FCC, 897 F. 2d 1164, 1166 (D. C. Cir. 1990). 2 Federal Communications Commission DA 00- 2827 3 an individual basis. 10 Waiver of the Commission's rules is therefore appropriate only if special circumstances warrant a deviation from the general rule, and such a deviation will serve the public interest. 11 5. We find that Primus has demonstrated that good cause exists to justify a limited waiver of the Commission’s authorization and verification requirements to the extent necessary to enable Primus to transfer to its own customer base the affected Network International customers. Primus, a licensed provider of interexchange services in 49 states and the District of Columbia, has entered into an agreement to purchase certain assets of Network International, including Network International’s customer base. Network International is a reseller providing intrastate, interstate, and international telecommunications services throughout the United States. 12 In the Waiver Petition, Primus states that Network International’s principal owner, Mark Sandler, has suffered increasingly severe health problems that have interfered with his ability to manage Network International’s operations. 13 According to the Waiver Petition, if Network International’s customer base is not transferred immediately to a qualified buyer, Network International’s customers could experience a decline in the level of customer service and Mr. Sandler’s health could be adversely affected. 14 Because of the size of Network International’s customer base, Primus asserts that it could not contact, solicit, and obtain appropriate verification from each Network International subscriber in an expeditious manner. 15 6. We conclude that special circumstances exist to justify a waiver. Without this waiver, the service of some former Network International customers might temporarily be interrupted when Network International ceases providing presubscribed service to customers who fail to respond in a timely fashion to requests for preferred carrier change authorization; those customers might also pay potentially higher casual calling rates after the discontinuance of presubscribed service. We conclude that a waiver of the Commission’s carrier change rules and orders is necessary to provide a seamless transition with no disruption of service to the transferred customers. 7. We find that Primus has demonstrated that a limited waiver of the authorization and verification rules is in the public interest because it will prevent consumers from temporarily losing service or paying significantly higher rates, and because Primus has agreed to notify the affected customers as described below. Primus states that it will undertake a two- step process to notify the affected customers of the transfer. 16 In a first letter, Primus will inform customers of 10 WAIT Radio, 418 F. 2d at 1157. 11 WAIT Radio, 418 F. 2d at 1159; Northeast Cellular, 897 F. 2d at 1166. 12 Waiver Petition at 2. 13 Waiver Petition at 3. 14 Waiver Petition at 3. 15 Waiver Petition at 4. 16 Waiver Petition at 3. Primus filed sample notification letters. See Waiver Petition, Attachments A and B (Notification Letters). 3 Federal Communications Commission DA 00- 2827 4 the proposed transfer and assure them that no charges or rate increases will be imposed as a result of the transfer. 17 Primus states that it will also advise the affected customers that they can choose a different preferred carrier, should they desire to do so. 18 In addition, customers will be given a toll- free number to call with any questions they may have about the transition. 19 According to the Waiver Petition, once the proposed transfer has been consummated, Primus will notify these customers of that event and reiterate the foregoing information, assurances, and advice. 20 Moreover, Primus has agreed to work with the complainants, Network International, and the Commission to investigate and resolve complaints regarding services provided by Network International. 21 We conclude that these conditions will adequately protect the rights of the transferred customers of Network International. 8. For the foregoing reasons, we grant Primus a waiver of the authorization and verification requirements of our rules for the limited purposes described above. The grant of this waiver is conditioned upon Primus’ provision of customer notification and handling of complaints, as described above and further detailed in the Waiver Petition and Supplement. III. ORDERING CLAUSES 9. Accordingly, pursuant to authority contained in Sections 1, 4, and 258 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 154, 258, and the authority delegated under sections 0.91, 0.291, and 1.3 of the Commission's rules, 47 C. F. R. §§ 0.91, 0.291, 1.3, the waiver request filed by Primus Telecommunications, Inc. on November 17, 2000, and supplemented on December 8, 2000, IS GRANTED to the extent indicated herein. 10. IT IS FURTHER ORDERED that this Order is effective upon release. FEDERAL COMMUNICATIONS COMMISSION K. Michele Walters Associate Chief, Accounting Policy Division, Common Carrier Bureau 17 Waiver Petition at 3; Notification Letters. 18 Waiver Petition at 3; Notification Letters. 19 Waiver Petition at 3; Notification Letters. 20 Waiver Petition at 3; Notification Letters. 21 Supplement. 4