10 FCC Red No. 21 Federal Communications Commission Record DA 95-1905 Before the Federal Communications Commission Washington, D.C. 20554 LETTER September 1,1995 Released: September 1,1995 Ronald J. Marlowe, Esq. Cohen, Berke, Bernstein, Brodie, Kondell & Laszlo Terremark Centre 19th Floor 2601 South Bayshore Drive Miami, Florida 33133-5460 Dear Mr. Marlowe: This is in response to your informal request for a staff ruling regarding the legality of certain information and/or entertainment programs provided pursuant to tariffed rates for international communications services. Your inquiry is made on behalf of clients who apparently are interested in tariffing "international long distance services" for the trans mission of information and/or entertainment programs. You present scenarios whereby calls to foreign destinations providing audio information programs would be transmit ted through three different dialing sequences: (1) 10XXX + international number; (2) 1-500-NXX-XXXX; or (3) 1-700-NXX-XXXX. In each case, the calls would be trans mitted by an entity authorized to provide international direct dialed telecommunications services pursuant to Sec tion 214 of the Communications Act (the Act) at a tariffed rate. Calls to the international information programs would be billed to telephone subscribers at that tariffed rate as standard toll charges. No charges would be assessed by the information provider directly to the caller or subscriber. You ask whether the legality of the arrangement would be affected if: (1) the carrier remits a portion of the transport charge to the party advertising the destination number; or (2) the carrier remits a portion of the transport charge to the destination entity for providing the information. You also inquire whether the arrangement is lawful if steps are taken so that the destination number could not be accessed through any other carrier, and whether such calls may be billed on a separate page with consumer disclosures as non-deniable (so that disputes do not lead to disconnection of service). As explained below, the staff concludes that it is a viola tion of federal law for any entity to provide tariffed com mon carrier communications services in an arrangement - whether domestic or international - where charges are assessed for calls to information programs in the manner you describe and/or when the carrier blocks access to a number from other carriers. Common carriers engaged in such practices are not providing common carrier commu nications services in a just and reasonable manner as re quired by Section 201(b) of the Act, and are violating both the letter and spirit of Section 228 of the Act. Traditionally, information and entertainment programs have been provided to telephone subscribers at rates ex ceeding the tariffed transmission rates charged by the trans mitting common carrier. Such interstate information services are regulated as "pay-per-call" services under the Telephone Disclosure and Dispute Resolution Act (TDDRA) (codified at Section 228 of the Act) and im plementing regulations adopted by both this Commission and the Federal Trade Commission. Our rules require that all pay-per-call services must be provided on the 900 ser vice access code. Common carriers involved in either trans mitting and/or billing subscribers for pay-per-call services are subject to several statutory requirements intended to ensure that consumers are able to prevent access to or charges for unwanted information services. Specifically, the TDDRA requires carriers to offer telephone subscribers the option of blocking access to pay-per-call services and pro hibits the disconnection of basic telecommunications ser vices for failure to pay pay-per-call charges. While the statute establishes a comprehensive system for federal regu lation of pay-per-call services, it specifically exempts from pay-per-call status "any service the charge for which is tariffed" and services offered pursuant to a "presubscription or comparable arrangement." In determining whether an entity licensed as a common carrier may lawfully provide service in the manner you describe, we note first that information programs should not be tariffed as common carrier services. Rather, com mon carriers may offer information programs only as non- tariffed "enhanced" services in accordance with Section 64.702 of the Commission's rules. Moreover, it is a basic and central principle of common carriage that a carrier may provide tariffed service only as an objective conduit of a customer's communication, without influence or control in determining either the content of the communication or the destination of a customer's calls within its authorized service area. See Amendment of Parts 2, 91, and 99 of the Commission's Rules Insofar as They Relate to the Indus trial Radiolocation Service, Report and Order, 5 FCC 2d 197, 202 (1966). Through payments to an information pro vider or destination entity (other than standard settlement payments), a carrier would abandon objectivity and acquire a direct interest in promoting the delivery of calls to a particular number for the provision of a particular com munication. This precept applies regardless of the particu lar dialing sequence used to place calls. Also, any carrier that is involved, either directly or indirectly, in blocking access to the called number by other carriers or in deter mining or influencing the content of the communications delivered through its network is not, we believe, offering a common carrier service. We recognize that long distance carriers lawfully assign numbers in limited circumstances and are the sole carrier to transport calls to such numbers. Restricting access to a particular telephone number that has been assigned for access by multiple carriers, however (or creating fictitious numbers), so that calls to that num ber can be completed only on one carrier's system is anticompetitive and an unjust and unreasonable practice, because that action deprives consumers of their right to use their preferred carrier. A carrier may lawfully provide service to information providers is only if it has absolutely no involvement or interest in the communications made through its network and does not engage in any action to encourage calls to a particular number or limit access to that number to callers using its transmission services. In summary, in the service scenarios you describe the carrier would appear to be providing an enhanced service, not a 10945 DA 95-1905 Federal Communications Commission Record 10 FCC Red No. 21 basic common carrier communications service. Accord ingly, imposing tariffed charges for the service would be an unjust and unreasonable practice under Section 201(b) of the Act. This conclusion is reinforced by the implication that your clients apparently plan to deliver calls only to a limited group of people (information providers), rather than making their service available to call any number at competitive rates using standard communications operator and billing procedures. The services you describe are also unlawful under Sec tion 228 of the Act and the Commission's implementing rules. It appears from your description of the proposed services that your clients desire to operate -within the "tariffed service" exception to the definition of pay-per-call service, and thus evade the letter and spirit of those provi sions and the important consumer safeguards for informa tion services. The Commission is committed to eliminating abusive practices which deprive consumers of their statu tory rights concerning such services. Although Congress exempted from the pay-per-call definition services that are provided on a tariffed basis, we do not believe that the service you describe is encompassed within that exception. The fact that the consumer does not directly pay the in formation provider does not exclude the service from the definition of pay-per-call if the payment is simply paid to the information provider by the carrier and then recovered from the consumer through the transport charge. In this case, the transport tariff is a sham; the consumer has, in fact, paid the carrier for transport and the provider, albeit indirectly, for the information. Section 64.1506 of the Commission's rules requires that such calls be provided only on the 900 service access code. Clearly, Congress did not intend that the carefully crafted provisions of the TDDRA and Section 228 of the Act could be evaded by the arrangement you describe. The payment of commissions in this instance is not comparable to carriers' payments to aggregators such as pay telephone owners. Those commissions simply compensate aggregators for their costs of making services and facilities available to the transient public for its communications need. See AT&T's Private Payphone Compensation Plan, 3 FCC Red 5834, 5836 (Com. Car. Bur. 1988), recon. and review denied, 1 FCC Red 7135 (1992). The Commission has found that such commissions are a legitimate business practice so long as callers are not prevented from using any other carrier to place a call. Id., National Telephone Ser vices, Inc., 8 FCC Red 654, 655 (Com. Car. Bur 1993). In contrast, the proposed payments to information providers are expressly designed to evade the consumer safeguards set forth in the TDDRA and the Commission's rules. Finally, we note that carriers are issued certificates of authorization under Section 214 of the Act when the Com mission determines that such issuance serves the public interest and convenience. We believe that the inherently evasive and anti-consumer and anti-competitive actions that you describe are contrary to the Section 214 mandate applicable to carriers providing international service even absent specific violations of the Act and the Commission's rules. For example, assigning a 500 number to an informa tion provider for termination in a country where the ter minating carrier pays the provider to route calls to that location would be, in the staffs view, inconsistent with the public interest mandate in Section 214. Thus, entities who have applied for or hold such authorizations may place such applications or authorizations in jeopardy if they conduct such activities. Because the staff believes that the calling arrangements you describe would violate Sections 201(b) and 228 of the Act, and would be inconsistent with the public interest considerations set forth in Section 214 of the Act, we need not address the manner in which the calls may be billed. Carriers may not bill subscribers for unlawful calls. This is a staff ruling issued pursuant to Section 0.291 of the Commission's rules, 47 C.F.R. § 0.291. Applications for review must be filed within 30 days of public notice of this action. See 47 C.F.R. § 1.115. Sincerely, John B. Muleta Chief, Enforcement Division Common Carrier Bureau 10946