*Pages 1--57 from Microsoft Word - 47196.doc* Federal Communications Commission FCC 05- 55 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of Truth- in- Billing and Billing Format National Association of State Utility Consumer Advocates’ Petition for Declaratory Ruling Regarding Truth- in- Billing ) ) ) ) ) ) ) ) ) CC Docket No. 98- 170 CG Docket No. 04- 208 SECOND REPORT AND ORDER, DECLARATORY RULING, AND SECOND FURTHER NOTICE OF PROPOSED RULEMAKING Adopted: March 10, 2005 Released: March 18, 2005 By the Commission: Chairman Powell and Commissioner Abernathy issuing separate statements; Commissioners Copps and Adelstein approving in part, dissenting in part, and issuing separate statements. Comment Date: 30 days after publication in the Federal Register. Reply Comment Date: 60 days after publication in the Federal Register. TABLE OF CONTENTS Paragraph I. INTRODUCTION.................................................................................................................................. 1 II. BACKGROUND.................................................................................................................................... 4 A. Truth- in- Billing Orders.................................................................................................................... 4 B. Joint Advertising Statement............................................................................................................. 7 C. Universal Service Contribution Order ............................................................................................. 8 D. State and Industry Action .............................................................................................................. 11 E. NASUCA Petition.......................................................................................................................... 13 III. SECOND REPORT AND ORDER...................................................................................................... 14 A. Background.................................................................................................................................... 14 B. Discusion ....................................................................................................................................... 16 IV. DECLARATORY RULING ................................................................................................................ 21 A. Background.................................................................................................................................... 21 B. Discussion...................................................................................................................................... 23 1. NASUCA Petition ................................................................................................................... 23 2. Application of Section 201( b) to Line Items........................................................................... 25 3. Section 332.............................................................................................................................. 30 V. SECOND FURTHER NOTICE OF PROPOSED RULEMAKING.................................................... 37 A. Introduction.................................................................................................................................. 37 B. Discussion...................................................................................................................................... 38 1. Billing of Government Mandated and Non- Mandated Charges.............................................. 38 2. Combination of Federal Regulatory Charges in Line Items.................................................... 48 1 Federal Communications Commission FCC 05- 55 2 3. Preemption of Inconsistent State Regulation .......................................................................... 49 4. Point of Sale Disclosure .......................................................................................................... 55 VI. PROCEDURAL ISSUES ..................................................................................................................... 58 VII. ORDERING CLAUSES...................................................................................................................... 69 APPENDIX A – RULE CHANGE APPENDIX B – SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ANALYSIS APPENDIX C – INITIAL REGULATORY FLEXIBILITY ANALYSIS APPENDIX D – LIST OF COMMENTERS AND REPLY COMMENTERS I. INTRODUCTION 1. In this item, we address a Petition for Declaratory Ruling filed by the National Association of State Utility Consumer Advocates (NASUCA) seeking to prohibit telecommunications carriers from imposing any separate line item or surcharge on a customers’ bill that was not mandated or authorized by federal, state or local law. 1 In light of the significant consumer concerns with the billing practices of wireless and other interstate providers raised in this proceeding and outstanding issues from the 1999 Truth- in- Billing Order and Further Notice, 2 we also take this opportunity to reiterate certain aspects of our existing rules and policies affecting billing for telephone service. Specifically, we: 1) remove the existing exemption for Commercial Mobile Radio Service (CMRS) carriers from 47 C. F. R. § 64.2401( b) – requiring that billing descriptions be brief, clear, non- misleading and in plain language; 2) reiterate that non- misleading line items are permissible under our rules; 3) reiterate that it is misleading to represent discretionary line item charges in any manner that suggests such line items are taxes or charges required by the government; 4) clarify that the burden rests upon the carrier to demonstrate that any line item that purports to recover a specific governmental or regulatory program fee conforms to the amount authorized by the government to be collected; and 5) clarify that state regulations requiring or prohibiting the use of line items for CMRS constitute rate regulation and are preempted under section 332( c)( 3)( A). 2. In addition, in a Further Notice of Proposed Rulemaking, we propose and seek comment on certain measures to facilitate the ability of telephone consumers to make informed choices among competitive telecommunications service offerings. In particular, we: 1) tentatively conclude that where carriers choose to list charges in separate line items on their customers’ bills, government mandated charges must be placed in a section of the bill separate from all other charges; 2) seek comment on the distinction between government “mandated” and other charges; 3) seek comment on whether it is unreasonable to combine federal regulatory charges into a single line item; and 4) tentatively conclude that carriers must disclose the full rate, including any non- mandated line items and a reasonable estimate of government mandated surcharges, to the consumer at the point of sale, and that such disclosure must occur before the customer signs any contract for the carrier’s services. In an effort to address the potential for balkanized state regulation of CMRS and other interstate carrier billing practices, we also 1 Petition for Declaratory Ruling, filed by National Association of State Utility Consumer Advocates’ (March 30, 2004) (NASUCA Petition). NASUCA is an association of 44 consumer advocates designated by the laws of their respective states to represent the interests of utility consumers before state and federal regulators and in the courts. 2 Truth- in- Billing and Billing Format, First Report and Order and Further Notice of Proposed Rulemaking, CC Docket No. 98- 170, 14 FCC Rcd 7492 (1999) (Truth- in- Billing Order and/ or Further Notice). 2 Federal Communications Commission FCC 05- 55 3 tentatively conclude that the Commission should reverse its prior holding permitting states to enact and enforce telecommunications carrier- specific truth- in- billing rules, and that the Commission should preempt inconsistent state regulation. We emphasize, however, that no action we propose will limit states’ ability to enforce their own generally applicable consumer protection laws. 3. We believe that the truth- in- billing rules proposed herein and the clarifications we make will allow consumers to better understand their telephone bills, compare service offerings, and thereby promote a more efficient competitive marketplace. As the Commission noted in 1998 when it initiated the Truth- in- Billing proceeding, the proper functioning of competitive markets is predicated on consumers having access to accurate, meaningful information in a format that they can understand. 3 Unless consumers are adequately informed about the service choices available to them and are able to make reasonable price comparisons between service offerings, they are unlikely to be able to take full advantage of the benefits of competitive forces. II. BACKGROUND A. The Truth- in- Billing Orders 4. In 1999, the Commission released the Truth- in- Billing Order to address concerns that there was growing consumer confusion relating to billing for telecommunications service and an increase in the number of entities willing to take advantage of this confusion. Consistent with sections 201( b) and 258 of the Communications Act of 1934, as amended (the “Act”), 4 the Commission adopted “broad, binding principles to promote truth- in- billing rather than mandate detailed rules that would rigidly govern the details or format of carrier billing practices.” 5 5. The Commission stated that these truth- in- billing principles should apply to all carriers, including wireless carriers. 6 In general, the principles require: 1) that consumer telephone bills be clearly organized, clearly identify the service provider, and highlight any new providers; 2) that bills contain full and non- misleading descriptions of charges that appear therein; and 3) that bills contain clear and conspicuous disclosure of any information the consumer may need to make inquiries about, or contest charges on the bill. 7 The Commission incorporated these principles into rules “because we intend for these obligations to be enforceable to the same degree as other rules.” 8 However, most of the details 3 See Truth- in- Billing and Billing Format, CC Docket No. 98- 170, Notice of Proposed Rulemaking, 13 FCC Rcd 18176 (1998). 4 Section 201( b) requires that common carriers’ “practices … for and in connection with … communications service, shall be just and reasonable, and any such … practice … that is unjust or unreasonable is hereby declared to be unlawful …”. 47 U. S. C. § 201( b). Section 258( a) 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 verification procedures as the Commission shall prescribe." 47 U. S. C. § 258. 5 See Truth- in- Billing Order, 14 FCC Rcd at 7498, para. 9. 6 Id. at 7501, para 13. 7 Id. at 7496, para 5. 8 Id. at 7499, para. 9; see 47 C. F. R. §§ 64.2400 and 2401. 3 Federal Communications Commission FCC 05- 55 4 regarding compliance with these obligations were left to the carriers to satisfy in a manner that best fit their own specific needs and those of their customers. At that time, the Commission determined that, although the principles and section 201( b) applied to all carriers, it would be appropriate to exempt CMRS carriers from three of the codified rules because they were deemed either inapplicable or unnecessary in the CMRS context. 9 In a Further Notice, however, the Commission sought comment on whether these rules should apply to CMRS carriers in the future. 10 6. On March 29, 2000, the Commission modified some of the Truth- in- Billing requirements in an Order on Reconsideration. 11 In addition, the Commission clarified that where an entity bundles a number of services, some of which may be provided by different carriers, as a single package offered by a single company, such offering may be listed on a telephone bill as a single offering. 12 B. Joint Advertising Statement 7. On March 1, 2000, the Commission released a Joint Policy Statement with the Federal Trade Commission (FTC) to provide carriers with guidance about how principles of truthful advertising apply in the long distance service marketplace. 13 The Commission explained that the need to address such issues arose from a proliferation of advertisements for dial- around numbers, long- distance calling plans, and other new telecommunications services; combined with an increase in the number of complaints regarding how these services were promoted. 14 In addition, the Joint Policy Statement noted that the FCC found that unfair and deceptive marketing practices by common carriers constitute unjust and unreasonable practices under section 201( b) of the Act. 15 The Commission and FTC provided specific examples of misrepresentations in advertisements for long- distance service and material information that carriers 9 Truth- in- Billing Order, 14 FCC Rcd at 7501, para. 15. See also 47 C. F. R. § 64.2400( b). 10 Truth- in- Billing Further Notice, 14 FCC Rcd at 7535, para. 68. In the Further Notice, the Commission also proposed standard labels for line items for charges associated with federal regulation. The Commission tentatively concluded that the following labels would be appropriate: "Long Distance Access" to identify charges related to interexchange carriers' costs for access to the networks of local exchange carriers; "Federal Universal Service" to describe line items seeking to recover universal service contributions; and "Number Portability" to describe charges relating to local number portability. The Commission asked for comments on these proposed labels and alternatives. Id. at 7537, para 71. 11 Truth- in- Billing and Billing Format, CC Docket No. 98- 170, Order on Reconsideration, 15 FCC Rcd 6023 (2000). Specifically, the Reconsideration Order: 1) modified the requirement for identification of new service providers to apply only to subscribed services for which the provider places periodic charges on the bill (i. e. not per- transaction basis such as dial- around or directory assistance— although those still have to be separated by provider); and 2) modified the “contact” requirement to allow for other electronic means in addition to the toll-free number, in limited cases where the customer does not receive a paper copy of the bill (for example billed by e- mail or Internet). 12 Id. at 6027, para. 9. 13 See Joint FCC/ FTC Policy Statement For the Advertising of Dial- Around And Other Long- Distance Services To Consumers, File No. 00- 72, 15 FCC Rcd 8654 (2000) (Joint Policy Statement). 14 Id. at 8655, para. 3. 15 Id. at para. 4. 4 Federal Communications Commission FCC 05- 55 5 should clearly and conspicuously disclose in such advertisements to comply with section 201( b). 16 C. Universal Service Contribution Order 8. In 2002, the Commission released the Universal Service Fund Contribution Order (USF Contribution Order), which examined the reasonableness of a line item that purported to describe Universal Service fees under section 201( b). 17 The amount of the Universal Service line item imposed by carriers on customers often varied from the contribution factor used to calculate the carriers’ actual obligation to the fund. The Commission noted that an analysis of federal universal service line- item charges across industry segments revealed that such charges often bore little or no relationship to the amount of the assessment. 18 The Commission stated that to the extent that carriers recover their contribution costs through a separate line item on customer bills, they must accurately describe the nature of the charge. 19 9. The Commission found it was “unreasonable” under section 201( b) for carriers to characterize administrative and other costs as part of regulatory fees or universal service charges. The Commission stated that such costs are no different than other costs associated with the business of providing telecommunications service and, although they could be recovered through rates or other line item charges, it is unreasonable to describe an amount as a universal service regulatory fee when that 16 See id. at 8657- 69, paras. 11- 32. For example, the Statement provided the following example of misleading advertising: A 30- second television advertisement for a long- distance calling plan features a spokesperson who on three occasion states that calls on the plan are “10¢ a minute anytime.” In addition, a graphic reading “10¢ a minute anytime” is depicted twice during the ad. In fact, the 10¢ a minute rate requires the payment of a $5.95 monthly fee. The only disclosure of the monthly fee is through a visual superscript at the end of the ad. Especially because the triggering representation— that calls on the plan are “10¢ a minute anytime”— was made both orally and visually, the visual superscript would likely be less effective in disclosing the monthly fee than had the same information been conveyed both orally and visually. Joint Policy Statement, Example #20. 17 See generally Federal- State Joint Board On Universal Service, CC Docket No. 96- 45, 1998 Biennial Regulatory Review - Streamlined Contributor Reporting Requirements Associated With Administration of Telecommunications Relay Service, North American Numbering Plan, Local Number Portability, and Universal Service Support Mechanisms, CC Docket No. 98- 171, Telecommunications Services for Individuals with Hearing and Speech Disabilities and the Americans with Disabilities Act of 1990, CC Docket No. 90- 571, Administration of the North American Numbering Plan and North American Numbering Plan Cost Recovery Contribution Factor and Fund Size, CC Docket No. 92- 237, Number Resource Optimization, CC Docket No. 99- 200, Telephone Number Portability, CC Docket No. 95- 116, Truth- In- Billing and Billing Format, CC Docket No. 98- 170, Report and Order and Second Further Notice of Proposed Rulemaking, 17 FCC Rcd 24952, 24979, para. 54 (2002) (USF Contribution Order). 18 Id. at 24977, para 47. “We are concerned, however, that the flexibility provided under our current rules may have enabled some companies to include other completely unrelated costs in their federal universal service line items.” Id. at 24978, para 49. 19 Id. at para. 51. 5 Federal Communications Commission FCC 05- 55 6 amount varies from the contribution factor. 20 Carriers, therefore, are prohibited from including administrative costs in line items that are “characterized as federal universal service contribution recovery charges.” 21 10. The Commission stated that the elimination of mark- ups in carrier universal service line items would alleviate end user confusion and frustration, and “foster a more competitive market by better enabling customers to comparison shop among carriers.” 22 The Commission also concluded that this action would further the goal of “promoting transparency for the end user in order to facilitate informed customer choice.” 23 Finally, the Commission declined at that time to mandate a specific label for federal universal service line- items, but said it would monitor the order’s effect on carrier practices. 24 D. State and Industry Actions 11. In 2003, the wireless industry developed the CTIA Consumer Code to facilitate the provision of accurate information between consumers and wireless service providers. 25 Over 30 wireless service providers, including many national providers, are signatories to the Code. In relevant part, the Code requires that signatory carriers “Disclose Rates and Terms of Service to Consumers.” 26 Among the disclosures mandated by that provision is the disclosure of “the amount or range of any . . . fees or surcharges that are collected and retained by the carrier.” In addition, the Code requires that carriers separately identify carrier charges from taxes on billing statements. 27 12. In July 2004, Attorneys General from 32 states entered into settlement agreements with Verizon Wireless, Cingular Wireless, and Sprint PCS regarding allegations of misleading advertisements and unclear disclosures relating to service agreement terms and wireless coverage areas. 28 Specifically, 20 Id. at 24980, para 54. 21 Id. 22 Id. at 24978, para 50. 23 Id. 24 Id. at 24983, para 65 25 See http:// www. ctia. org/ wireless_ consumers/ consumer_ code/ index. cfm. 26 CTIA Code, Item One. 27 CTIA Code, Item Six: On customers’ bills, carriers will distinguish (a) monthly charges for service and features, and other charges collected and retained by the carrier, from (b) taxes, fees and other charges collected by the carrier and remitted to federal, state, or local governments. Carriers will not label cost recovery fees or charges as taxes. 28 See Letter from Kathryn A. Zachem, Counsel for Verizon Wireless, to Marlene H. Dortch, FCC, dated Jan. 10, 2005 (Attachment – Assurance of Voluntary Compliance) (Verizon AVC). The thirty two states include: Alabama, Arkansas, Colorado, Delaware, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, (continued….) 6 Federal Communications Commission FCC 05- 55 7 with regard to consumer bills, carriers agreed to separate “taxes, fees, and other charges that [they are] required to collect directly from Consumers and remit to federal, state, or local governments, or to third parties authorized by such governments, for the administration of government programs” from monthly charges and all other discretionary charges, except when the taxes, fees and other charges are bundled into a single rate with monthly charges for service and all other discretionary charges. 29 The carriers also agreed to not represent, expressly or by implication, that the discretionary costs recovery fees are taxes. 30 In addition, the carriers agreed to make point of sale disclosures describing all charges appearing on consumers’ bills. 31 E. NASUCA Petition 13. On March 30, 2004, NASUCA filed a Petition for Declaratory Ruling in the Truth- in- Billing and Billing Format Docket urging the Commission to address what it describes as the growing problem of consumer confusion with telephone bills. Specifically, NASUCA requested that the Commission clarify that telecommunications carriers – both wireline and wireless – are prohibited from imposing line- item charges, surcharges or other fees on customers’ bills unless those charges are expressly mandated or authorized by a federal or state law. NASUCA argues that allowing the inclusion of line items that are not mandated or authorized by the government violates the truth- in- billing principles and rules and both section 201( b) and 202 of the Act. In addition, NASUCA argues that the amount of any such government mandated charge must conform to the amount expressly authorized by federal, state, or local governmental authority. NASUCA’s Petition sets forth numerous examples of line item charges imposed by interexchange (IXC) and wireless carriers that it contends are misleading or unreasonable. 32 On May 25, 2004, the Consumer & Governmental Affairs Bureau issued a public notice seeking comment on the Petition in a newly created CG Docket 04- 208. In addition to numerous individual consumers, more than 40 parties filed comments in response to the Petition. III. SECOND REPORT AND ORDER A. Background 14. In the Truth- in- Billing Order, the Commission concluded that the broad principles adopted to promote truth- in- billing should apply to all telecommunications carriers, both wireline and wireless. 33 (Continued from previous page) North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Virginia, Wisconsin and Wyoming. 29 Verizon AVC at 14, para. 36( a). 30 Id. at para. 36( b). 31 Id. at 5- 9, paras. 17- 23. 32 See NASUCA Petition at 18- 23, 29 (contending that, for example, surcharges identified as “regulatory assessment fees,” “carrier cost recovery charges,” “interstate access surcharge,” “universal connectivity charge,” and “primary carrier charge” do not allow customers to accurately assess what they are being billed for or permit customers to determine whether the amounts charged conform to the price charged for service). 33 Truth- in- Billing Order, 14 FCC Rcd at 7501, para. 13 (“[ l] ike wireline carriers, wireless carriers also should be fair, clear, and truthful in their billing practices”). 7 Federal Communications Commission FCC 05- 55 8 The Commission noted that these principles represent fundamental statements of fair and reasonable practices. The Commission therefore rejected the argument that certain classes of carriers should be wholly exempt from complying with the truth- in- billing guidelines solely because competition exists in the market which they operate. 34 In the wireline context, the Commission incorporated these principles and guidelines into rules for enforcement purposes “after considering an extensive record of both the nature and volume of customer complaints, as well as substantial information about wireline billing practices.” 35 15. In the wireless context, however, the Commission found that the record did not reflect the same high volume of customer complaints, nor did the record indicate that CMRS billing practices failed to provide consumers with the clear and non- misleading information they need to make informed choices. 36 The Commission therefore exempted CMRS carriers from the truth- in- billing rule that requires charges contained on telephone bills to be accompanied by a brief, clear, non- misleading, plain language description of the service or services rendered. 37 In addition, the Commission found certain of the truth-in- billing rules inapplicable to CMRS. 38 In a Further Notice of Proposed Rulemaking, the Commission sought comment on whether the truth- in- billing rules adopted in the wireline context should apply to CMRS carriers in order to protect consumers. 39 The Commission reiterated that all consumers expect and should receive bills that are fair, clear, and truthful, but sought further comment on whether such a problem existed in the wireless context, and to what extent the presence of a competitive market is relevant to consumers’ ability to protect themselves from the harms that the truth- in- billing rules were designed to address. 40 The majority of commenters, representing primarily CMRS providers, responded that the lack of billing complaints against wireless providers along with the competitive nature of the wireless industry should indicate that it is not necessary to apply these rules to CMRS. 41 The California 34 Id. 35 Id. at para. 15. 36 Id. at 7502, para. 16. The Commission also noted that notwithstanding the decision not to apply these guidelines to CMRS providers, that such providers remain subject to the reasonableness and nondiscrimination requirements of sections 201 and 202, “and our decision here in no way diminishes such obligations as they may relate to billing practices of CMRS carriers.” See Truth- in- Billing Order, 14 FCC Rcd at 7502, para. 19. 37 See 47 C. F. R. §§ 64.2400( b), 64.2401( b). 38 For example, because CMRS carriers are excluded from equal access obligations, the Commission concluded that CMRS carriers will seldom need to indicate a new long distance service provider on their bill. See Truth- in- Billing Order, 14 FCC Rcd at 7502, para. 16. The Commission concluded that CMRS carriers must comply with two of the truth- in- billing rules: 1) that the name of the service provider associated with each charge be clearly identified; and 2) that each bill should prominently display a telephone number that customers may call free- of- charge in order to inquire or dispute any charge contained on the bill. See 47 C. F. R. § 64.2401( a)( 1) and (d). 39 Truth- in- Billing Further Notice, 14 FCC Rcd at 7535- 36, paras. 68- 70. 40 Id. at paras. 68- 69. 41 See, e. g., Bell Atlantic Mobile 1999 Comments at 3; CTIA 1999 Comments at 5; PCIA 1999 Comments 4- 5. 8 Federal Communications Commission FCC 05- 55 9 Public Utilities Commission, on the other hand, argued that section 64.2401( b) of our rules is so fundamental that it should apply to all telecommunications carriers, including CMRS carriers. 42 Finally, responding to the Commission’s suggestion that parties address the applicability of a section 10 forbearance analysis, 43 a few commenters suggested that the Commission should consider forbearing the truth- in- billing requirements to CMRS carriers. 44 B. Discussion 16. We conclude that CMRS carriers should no longer be exempt from 47 C. F. R. § 64.2401( b) ’s requirement that billing descriptions be brief, clear, non- misleading and in plain language. In creating this exemption in 1999, the Commission relied upon the fact that the record did not indicate a high volume of complaints in the CMRS context. 45 The Commission’s more recent data indicates that complaints regarding wireless “billing & rates” and “marketing & advertising” have increased significantly since that time. For example, in 1999, the Commission received only a few dozen complaints regarding wireless billing. 46 In 2004, the Commission received approximately 18,000 complaints about wireless carrier practices in these categories. 47 This trend is supported by the recent comments of a number of states and consumers in this proceeding. 48 Although we acknowledge that this increase may be due in part to the significant increase in wireless subscribers since 1999, we also believe it is demonstrative of consumer confusion and dissatisfaction with current billing practices. 42 See Cal PUC July 26, 1999 Comments (also maintaining that 47 C. F. R. § 64.2401( a)( 2) and (c) should apply to CMRS carriers, the former in the event a CMRS carrier bills for charges for two or more carriers, and the latter in the event a CMRS carrier also bills for charges for basic local service). 43 Truth- in- Billing Order, 14 FCC Rcd at 7535, para. 69. 44 See, e. g., Omnipoint 1999 Comments at 5; PCIA 1999 Comments at 8. Neither Omnipoint nor PCIA suggest that they were formally petitioning the Commission for forbearance under section 10( c) of the Act. Section 10( c) establishes a one- year statutory deadline for Commission action on forbearance petitions, and provides that a petitioning party’s requested relief is “deemed granted” if the Commission does not act within that timeframe. See 47 U. S. C. § 160( c). The Commission did not treat these comments as petitions filed under section 10( c), nor did any party subsequently suggest that the procedure under section 10( c) had been triggered. Accordingly, while we discuss these parties’ comments regarding forbearance below, we do not recognize their comments as triggering the requirements of section 10( c) and do not recognize the relief as having been granted by operation of law. 45 Truth- in- Billing Order, 14 FCC Rcd at 7501- 02, para. 16. 46 See id. at 7564, Concurring Statement of Commissioner Michael K. Powell. 47 See First and Second Quarterly Report on Informal Consumer Inquiries and Complaints (rel. Feb. 11, 2005); Third and Fourth Quarterly Report on Informal Consumer Inquiries and Complaints (rel. March 4, 2005). See also 2003 Quarterly Report on Informal Consumer Inquiries and Complaints (rel. May 10, 2003; Sept. 12, 2003; Nov. 20, 2003 and June 10, 2004). Complaints filed in the categories of “billing and rates” and “marketing and advertising” constituted over one- half of the total complaints filed against wireless providers in 2003. 48 See, e. g., Cal. PUC Comments at 6- 7; Texas OAG Comments at 2; Consumers Union Comments at 3; Joseph Canfora Comments at 1; John Gantz Comments at 1; Nancy Murray Comments at 1. 9 Federal Communications Commission FCC 05- 55 10 17. We disagree with those commenters that argue that CMRS providers should be exempted from this requirement because they operate in a competitive marketplace. 49 The Commission specifically rejected this argument in the Truth- in- Billing Order noting that, as competition evolves, the provision of clear and truthful bills is paramount to efficient operation of the marketplace. 50 Although we agree that a robustly competitive marketplace provides the best incentive for carriers to meet the needs of their customers and affords dissatisfied customers with an opportunity to change carriers, we also recognize that some providers in a competitive market may engage in misconduct in ways that are not easily rectified through voluntary actions by the industry. 51 As the Commission emphasized in the Truth- in-Billing Order, one of the fundamental goals of the truth- in- billing principles is to provide consumers with clear, well- organized, and non- misleading information so that they will be able to reap the advantages of competitive markets. 52 We believe that making the requirements of 47 C. F. R. § 64.2401( b) mandatory for CMRS will help to ensure that wireless consumers receive the information that they require to make informed decisions in a competitive marketplace. 18. For the reasons discussed above, we also do not believe it would be appropriate to forbear from applying the truth- in- billing rules to CMRS carriers. We find that the record before us does not reflect that all three statutory criteria established under section 10 have been satisfied. Specifically, the record does not reflect that these requirements are unnecessary to ensure that the charges and practices of carriers are just and reasonable, or that forbearance is consistent with the public interest. To the contrary, the increasing number of consumer complaints to this Commission and state regulatory agencies regarding wireless billing practices provides empirical evidence that application of the truth- in- billing rules to CMRS carriers is necessary and in the public interest. It is critical for consumers to receive accurate billing information from their carriers to take full advantage of the benefits of a competitive marketplace. We also note that the Commission declined to forbear from the application of sections 201 and 202 of the Act to broadband Personal Communications Service (PCS), concluding that those sections “lie at the heart of consumer protection under the Act.” 53 In the PCIA Forbearance Order, the Commission noted that it had never previously refrained from enforcing sections 201 and 202 against common carriers, even when competition exists in a market. 54 19. The Commission already has concluded that the truth- in- billing principles, including the principle that billing descriptions be brief, clear, non- misleading and in plain language, apply to both 49 See, e. g., AT& T Wireless Comments at 2; CTIA Comments at 8; PCIA 1999 Comments at 5. 50 See Truth- in- Billing Order, 14 FCC Rcd at 7501, para. 14. 51 See also Personal Communications Industry Association’s Broadband Personal Communications Services Alliance’s Petition for Forbearance for Broadband Personal Communications Services, WT Docket No. 98- 100, Memorandum Opinion and Order and Notice of Proposed Rulemaking, 13 FCC Rcd 16857, 16868 at para. 23 (PCIA Forbearance Order) (1998) (“[ a] ssuming all relevant product and geographic markets become substantially competitive, moreover, carriers may still be able to treat some customers in an unjust, unreasonable, or discriminatory manner”). 52 Truth- in- Billing Order, 14 FCC Rcd at 7501, para. 14. 53 See PCIA Forbearance Order, 13 FCC Rcd at 16865, para. 15. 54 Id. at 16866, para. 17. 10 Federal Communications Commission FCC 05- 55 11 wireline and wireless. 55 The Commission also noted that CMRS billing practices remain subject to the reasonableness and nondiscrimination requirements of sections 201 and 202 of the Act. 56 Thus, we do not believe that making this requirement mandatory will constitute a significant new regulatory burden on CMRS providers, including smaller providers. 57 We believe that eliminating the exemption from 47 C. F. R. § 64.2401( b) for CMRS providers will remove any ambiguity regarding the necessity of CMRS carriers to provide clear and non- misleading billing information to their customers. In addition, CMRS carriers are put on notice that the Commission intends to review complaints regarding unclear or misleading billing descriptions, and may take enforcement action under this rule as appropriate based on such complaints or other evidence of non- compliance. 20. Though we remove the exemption from 47 C. F. R. § 64.2401( b) for CMRS providers, and thereby erase any ambiguity regarding the necessity of CMRS carriers to provide clear and non-misleading billing information to their customers under our rules, we recognize that states may wish to play a role in enforcing rules against CMRS and other interstate carriers providing misleading billing information. At a minimum, we emphasize that no action that we take in this Second Report and Order and the Declaratory Ruling below limits states’ authority to enforce their own generally applicable consumer protection laws, to the extent such laws do not require or prohibit use of line items, nor limits a state’s ability to assess taxes or create, for example, a state- specific universal service fund to which carriers must contribute. In the Second Further Notice below, we seek comment on specifically where to draw the line between the Commission’s jurisdiction and states’ jurisdiction over the billing practices of CMRS and other interstate carriers. IV. DECLARATORY RULING A. Background 21. In its Petition for Declaratory Ruling, NASUCA raises concerns about the use of line items on consumer telephone bills. NASUCA contends that, in some cases, the exact nature of the line items are often unclear from the descriptions, and the line items are characterized in a way that could mislead consumers into believing these charges are government mandated charges. Further, NASUCA contends that the descriptions of such line items often have little or no relationship to the actual charge listed on the bill. 22. NASUCA requests that the Commission prohibit telecommunications carriers – both wireline and wireless - from imposing monthly line- item charges, surcharges or other fees on customers’ bills unless such charges expressly have been mandated or authorized by a regulatory agency. 58 NASUCA does not object to line items for “government mandated fees,” nor does it object to “government 55 Truth- in- Billing Order, 14 FCC Rcd at 7501, para. 14. 56 Id. at 7502, para. 19. 57 See Cingular Comments at 7- 11 (contending that Cingular is already in compliance); Leap Comments at 9- 11 (fees meet truth- in- billing requirements); Verizon Wireless Comments (bills comply with federal law even though Verizon Wireless is not subject to truth- in- billing rules). 58 NASUCA asks that if we deem a Petition for Declaratory Ruling to be procedurally lacking for their proposals, that we instead initiate a new rulemaking. 11 Federal Communications Commission FCC 05- 55 12 authorized fees.” NASUCA argues that allowing the inclusion of line items that are not mandated or authorized by the government violates the Truth- in- Billing principles and rules, the USF Contribution Order, and both sections 201( b) and 202 of the Act. B. Discussion 1. NASUCA Petition 23. We deny NASUCA’s request for a Declaratory Ruling prohibiting telecommunications carriers from imposing any line items or charges that have not been authorized or mandated by the government. There is no general prohibition against the use of line items on telephone bills under our rules or the Act. As NASUCA has acknowledged, nothing in the Truth- in- Billing Order prohibits carriers from using non- misleading line items. 59 To the contrary, the USF Contribution Order states that while carriers cannot include administrative costs under the umbrella of regulatory charges, they may recover such costs through their rates or “other line items.” 60 The truth- in- billing rules require that charges contained on telephone bills be accompanied by a brief, clear, non- misleading, plain language description of the service or services rendered. 61 If carriers choose to offer descriptions of various charges in the form of line items, however, there is nothing in the existing Truth- in- Billing requirements to prevent them from doing so. 62 Nor do we believe there is any basis to conclude that such a practice is “unreasonable” under section 201( b). As several commenters have noted, the provision of accurate and non- misleading information on a telephone bill may be useful information to the consumer in better understanding the charges associated with their service and making informed cost comparisons between carriers. 63 In sum, we reiterate that carriers are not prohibited per se under our existing Truth- in- Billing rules or the Act from including non- misleading line items on telephone bills. 64 59 See generally Truth- in- Billing Order, 14 FCC Rcd 7492; see also NASUCA Petition at 8, and n. 16. See also AT& T Comment at 5 (no Commission order or rule that prohibits impositions of line- item charges). 60 See USF Contribution Order, 17 FCC Rcd at 24979, para. 55. See also Sprint Comments at 6 (citing the USF Contribution Order and E911 proceeding); USTA Comments at 4 (the only unresolved matter is how to standardize line items); Verizon Comments at 3- 5 (the Commission has expressly authorized the recovery of specific line item surcharges in Commission proceedings such as the USF Contribution Order, and proceeding regarding Local Number Portability fees); BellSouth Comments at 5 (NASCUA has failed to show a controversy or uncertainty). 61 47 C. F. R. § 64.2401( b). 62 See Sprint Comments at 15 and AT& T Comments at 10, 13 (the Commission left it up to the carriers to decide how to meet Truth- in- Billing requirements). 63 See, e. g., CTIA Comments at 3; Global Crossing Comments at 2; Verizon Wireless Comments at 14. 64 We note that this finding does not alter the role of any other specific prohibition or restriction on the use of line items. For example, this Commission has prohibited line items for interstate Telephone Relay Service (TRS) costs. See Telecommunications Services for Individuals with Hearing and Speech Disabilities, and the Americans with Disabilities Act of 1990, CC Docket No. 90- 571, Order on Reconsideration, Second Report and Order, and Further Notice of Proposed Rulemaking, 8 FCC Rcd 1802, 1806, para. 22 (1993). See also Report and Order and Request for Comments, 6 FCC Rcd 4657, 4664, para. 34; Telecommunications Relay Services and Speech- to- Speech Services for Individuals with Hearing and Speech Disabilities, CC Docket No. 98- 67, Order, 19 (continued….) 12 Federal Communications Commission FCC 05- 55 13 24. Commenters in this docket have supplied evidence that there is considerable consumer confusion regarding telephone bills and even possible abuse of line item charges. 65 Both the Texas Office of the Attorney General and the Iowa Utilities Board, for example, note that increasing amounts of their resources are devoted to reviewing various surcharges, in response to consumer complaints. 66 We recognize that the provision of accurate information on consumer telephone bills is among one of the most important issues for telecommunications consumers. In particular, we are concerned that some carriers may be disguising rate increases in the form of separate line item charges and implying that such charges are necessitated by governmental action. As a result, we take this opportunity to reiterate, and provide some additional clarifications to, our existing rules, and we seek further comment on additional proposals below that we believe would be beneficial in ensuring that consumers receive accurate information. We also recognize that overbroad state regulations in this area may frustrate our federal rules and the federal objective of minimizing regulatory burdens on the competitive CMRS industry. Moreover, we note that in establishing the regulatory framework for CMRS, Congress expressly assigned certain tasks, including rate regulation, to the federal government. Accordingly, we also discuss the roles of federal and state authority in this area, and identify those types of state regulations that expressly are preempted by the Act. (Continued from previous page) FCC Rcd 12224, 12228 n. 33 (2004). As noted infra, we intend to revisit the prohibition on line items referring to interstate TRS in a future proceeding in a separate docket that will take into consideration the policy objectives outlined in this proceeding. 65 See, e. g., TURN & UCAN Comments at 4 (contending that there has been a proliferation of deceptive, misleading charges). The National Consumers League says that complaints about billing descriptions have increased, prompting the group to create a link on their website regarding “Understanding Your Phone Bill,” but the group has difficulty keeping this up- to- date with the vague line items (Consumers League Comments at 4- 5). Consumers Union, the National Consumer Law Center, and the Massachusetts Union of Public Housing Tenants say the truth- in- billing principles have failed to clean up the clutter and to help consumers make informed choices about their service (Consumers Union Comments at 4). Ohio PUC describes consumer confusion over vague charges that appear to be regulatory in origin, such as “Government Assessment” charges (Ohio PUC Comments at 8- 10). Indiana URC contends that the practice of placing extra charges not expressly mandated or clearly disclosed on customer bills is misleading and does not comport with the spirit of the Act (Indiana URC Comments at 2). The Iowa UB says that it is difficult to determine if the surcharge is recovering only what the actual regulatory costs are to that carrier or operating costs; thus, the true cost of service is obscured, which makes it difficult for a consumer to make cost- based comparisons between competing service providers (Iowa UB Comments at 2). The Texas OAG states: “The State of Texas has received countless bills containing instances of regulatory fees and surcharges purporting to recover ‘regulatory’ or ‘administrative’ costs, but which upon further analysis are nothing other than regular operating expenses, such as those incurred by any other business” (Texas OAG Comments at 2). The commenting “Rural Wireline Carriers” contend that some of them provide interexchange services in competition with carriers that impose misleading line item surcharges described in NASUCA’s Petition (RWC Comments at 2). Massachusetts OAG contends that market forces alone are not sufficient to ensure that consumers are not deceived and can make accurate price comparisons (Massachusetts OAG Comments at 2). Teletruth provides details of a two- year investigation into consumer phone bills by Teletruth and New Networks Institute, a market research firm, and LTC Consulting, a phone bill auditing firm (see generally Teletruth Comments). Several consumer commenters also express discontent with the line item charges on their bills. See, e. g., Jason G. Campbell Comments. 66 Texas OAG Comments at 2; Iowa UB Comments at 2 (hundreds if not thousands of consumer inquiries concerning current billing practices). 13 Federal Communications Commission FCC 05- 55 14 2. Application of Section 201( b) to Line Items 25. Section 201( b) of the Act requires that all charges, practices, classifications, and regulations for and in conjunction with interstate communications service be just and reasonable, and gives the Commission jurisdiction to enact rules to implement that requirement. 67 The Commission has concluded that a carrier’s provision of misleading or deceptive billing information is an unjust and unreasonable practice in violation of section 201( b). 68 26. Although we have not prohibited carriers from using line items, we reiterate here that all carriers are prohibited from including misleading information on their telephone bills. We believe that it is useful to now provide some additional detail on whether certain practices may be deemed unreasonable or misleading under our rules. 69 It appears from the record that a common source of consumer confusion derives from the myriad of charges that are assessed by carriers ostensibly to recover costs incurred as a result of specific government action. These regulatory charges generally can be characterized as mandated fees or taxes that the carrier is required to collect from the consumer (e. g., federal excise tax), 70 authorized fees that the carrier has the discretion to pass on to the consumer (e. g., universal service), and administrative or other costs that may be associated with the cost of compliance with regulatory requirements. We emphasize that it is permissible for carriers to recover these costs so long as they do so in a manner that complies with our rules. 27. Consistent with the Commission’s prior findings, we reiterate that it is a misleading practice for carriers to state or imply that a charge is required by the government when it is the carriers’ business decision as to whether and how much of such costs they choose to recover directly from consumers through a separate line item charge. 71 Consumers may be less likely to engage in comparative shopping among service providers if they are led to believe erroneously that certain rates or charges are unavoidable federally mandated amounts from which individual carriers may not deviate. 72 This prohibition includes not only misleading statements or descriptions, but also placement of the charge on the bill in such a way as to lead a reasonable consumer to believe that the charge has been mandated by the government. For example, because placing a discretionary charge in a section or subsection of the bill that otherwise contains only government required charges or taxes may mislead a reasonable consumer into believing that such charge also is required, such placement is not allowed. We also are concerned that some carriers may be labeling certain non- regulatory line item charges in such a way as to create confusion with regulatory programs. As a result, carries should take great caution in using terms that are most commonly associated with governmental programs to describe other charges that are unrelated to 67 47 U. S. C. § 201( b). 68 See Truth- in- Billing Order, 14 FCC Rcd at 7560, para. 24. 69 We emphasize that our statements herein are of general applicability and are not intended to supersede more specific federal rules that may govern the recovery of particular fees. 70 See, e. g., 26 U. S. C. A. § 4251( a)( 2) (“ Payment of [excise] tax. – The tax imposed by this section shall be paid by the person paying for such services”). 71 See Truth- in- Billing Order, 14 FCC Rcd at 7527, para. 56. 72 See id. at 7522- 23, para. 49. 14 Federal Communications Commission FCC 05- 55 15 those programs. 73 28. Consistent with the Commission’s conclusion in the USF Contribution Order, we reiterate that it is unreasonable and misleading for carriers to include administrative and other costs as part of “regulatory fees or universal service charges” or similar line item labels that imply government mandated charges. 74 Although the Commission focused primarily on the universal service charge, we reiterate here that, as the language in that order indicates, this prohibition applies to all regulatory fees. It is our view that these costs are no different than other costs associated with the business of providing telecommunications service and may be recovered through rates or other line item charges. 75 Thus, it is an unreasonable practice for carriers to include any costs that do not accurately reflect the carrier’s actual obligation to the specific governmental program that the line item purports to recover. For example, carriers that elect to recover their universal service contribution costs through a separate line item may not mark up the line item above the relevant contribution factor established by the Commission. 76 As a result, a regulatory line item charge should never exceed any maximum amount or cap established by the government to recover for that specific program. Carriers that are not rate- regulated by this Commission, namely interexchange carriers, CMRS providers, and competitive local exchange carriers will have the same flexibility that exists today to recover legitimate administrative and other costs, and may recover those legitimate administrative and other related costs through rates or other line items. 29. To the extent that a carrier decides to collect a regulatory fee through a separate line item, we clarify that the burden rests upon the carrier to demonstrate that the charge imposed on the customer accurately reflects the specific governmental program fee it purports to recover. This burden is satisfied if the carrier demonstrates that the line item charge in question falls within any maximum level allowed by the government for its recovery. 77 In those instances, however, when a carrier is not subject to a maximum cap or other specific guidelines for its recovery, the carrier should be prepared to demonstrate that the cost imposed pursuant to a regulatory line item charge corresponds to the amount remitted to the government or its agent for that program. As discussed above, it is not permissible for a carrier to collect administrative or other charges pursuant to a line item that describes a specific governmental program or fee. Thus, carriers should be able to demonstrate with probative accounting documentation and other relevant evidence that the amounts collected for specific governmental programs and fees equals the amount submitted to the government or its agent for that program. 73 See, e. g., NASUCA Petition at 29- 30 (arguing that one carriers’ “TSR Administrative Fee” is designed to be confused with the Telecommunications Relay Service (TRS) charge, and another’s “Universal Connectivity Charge” may be confused with a separate universal service charge on that carrier’s bill). 74 USF Contribution Order, 17 FCC Rcd at 24979, para. 54. 75 Id. 76 See id. at 24978, paras. 49- 51 (noting that if the contribution factor is 7.28%, a carrier’s federal universal service line item charge cannot exceed 7.28%). 77 See, e. g., 47 C. F. R. § 54.712 (“ the amount of the federal universal service line- item charge may not exceed the interstate telecommunications portion of that customer’s bill times the relevant contribution factor”). 15 Federal Communications Commission FCC 05- 55 16 3. Section 332 30. We find that state regulations requiring or prohibiting the use of line items – defined here to mean a discrete charge identified separately on an end user’s bill – constitute rate regulation and, as such, are preempted under section 332( c)( 3)( A) of the Act. This statutory provision states, in relevant part: [N] o State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service or any private mobile service, except that this paragraph shall not prohibit a State from regulating the other terms and conditions of commercial mobile services. 78 As the D. C. Circuit has recognized, Congress did not specifically define “rates,” “entry,” or other key terms in section 332( c)( 3)( A). 79 The Commission, however, consistently has interpreted the rate regulation provision of the statute to be broad in scope. The Commission has interpreted this provision to “prohibit states from prescribing, setting or fixing rates” of wireless service providers. 80 The Commission also has made clear that the proscription of state rate regulation extends to regulation of “rate levels” and “rate structures” for CMRS. 81 Along these lines, the Commission has found that section 332( c)( 3)( A) not only prohibits states from prescribing “how much may be charged” for CMRS, but also prohibits states from prescribing “the rate elements for CMRS” or “specify[ ing] which among the CMRS services provided can be subject to charges by CMRS providers.” 82 We also note that our interpretation here is consistent with prior Commission statements equating “line items” with “rate elements.” 83 Recognizing the Commission’s broad prior interpretation of rate regulation and statements about line items, we find that state regulations 84 requiring or prohibiting line items similarly fall within the statute’s zone of 78 47 U. S. C. § 332( c)( 3)( A) (emphasis added). 79 CTIA v. FCC, 168 F. 3d 1332, 1336 (D. C. Cir. 1999). 80 Id., citing Pittencrief Communications, Inc., 13 FCC Rcd 1735, 1745 (1997) (“ Pittencrief Order”). 81 Southwestern Bell Mobile Systems, Inc. Petition for a Declaratory Ruling Regarding the Just and Reasonable Nature of, and State Challenges to, Rates Charged by CMRS Providers when Charging for Incoming Calls and Charging for Calls in Whole- Minute Increments, Memorandum Opinion and Order, 14 FCC Rcd 19898, 19906- 07, paras. 18- 20 (1999) (“ Southwestern Bell Order”). 82 Id. at 19907, para. 20. 83 For example, in discussing the manner in which federal universal service contributions may be reflected on end users’ bills, the Commission explained that “incumbent local exchange carriers are required to recover their federal universal service contribution costs through a line item, which may be combined for billing purposes with another rate element.” USF Contribution Order, 17 FCC Rcd at 24979, para. 53 n. 133 (emphasis added). And in a prior order on the same subject matter, the Commission approved a plan permitting local phone companies to establish “a separate rate element (e. g. line item)” to recover federal universal service contributions. Access Charge Reform, Price Cap Performance Review for Local Exchange Carriers, Low- Volume Long Distance Users, Federal- State Joint Board on Universal Service, Sixth Report and Order in CC Docket Nos. 96- 262 and 94- 1, Report and Order in CC Docket No. 99- 249, Eleventh Report and Order in CC Docket No. 96- 45, 15 FCC Rcd 12962, 13057- 58, paras. 218- 19 (2000). 84 We note that the terms “state regulation” and “state regulatory action” have broad application in the context of section 332. See Wireless Consumers Alliance, Inc. Petition for a Declaratory Ruling Concerning (continued….) 16 Federal Communications Commission FCC 05- 55 17 proscribed state regulatory activity. 85 31. A closer look at the type of state regulations in question reveals that many directly affect CMRS carriers’ rates and rate structures in a manner that amounts to rate regulation. State regulations that prohibit a CMRS carrier from recovering certain costs through a separate line item, thereby permitting cost recovery only through an undifferentiated charge for service, clearly and directly affect the manner in which the CMRS carrier structures its rates. 86 Parties have submitted several examples of state regulations and proposals in this category, all of which are preempted by the Act. 87 As a further illustration, we note that the regulatory relief sought by NASUCA in its Petition (i. e., a regulation curtailing a CMRS carrier’s ability to structure its bills and isolate charges into separate line items) would have a direct effect on a CMRS carrier’s rate structure presented to its end users and, if instituted by a state commission, would be preempted by the Act. We find that the converse is also true: a state rule requiring CMRS carriers to segregate particular costs into line items represents the other side of the same coin, and similarly would limit a carrier’s ability to set and structure its rates. Parties have submitted at (Continued from previous page) Whether the Provisions of the Communications Act of 1934, as Amended, or the Jurisdiction of the Federal Communications Commission Thereunder, Serve to Preempt State Courts from Awarding Monetary Relief Against Commercial Mobile Radio Service (CMRS) Providers (a) for Violating State Consumer Protection Laws Prohibiting False Advertising and Other Fraudulent Business Practices, and/ or (b) in the Context of Contractual Disputes and Tort Actions Adjudicated Under State Contract and Tort Laws, WT Docket No. 99- 263, Memorandum Opinion and Order, 15 FCC Rcd 17021, 17027, para. 12 (2000) (“ Wireless Consumers Alliance Order”) (recognizing that judicial, legislative and administrative action all can constitute state regulation under section 332). 85 We note that our analysis of section 332 herein has no effect on voluntary agreements between CMRS carriers and states such as the one discussed above in para. 12. 86 We recognize that precluding states from prohibiting carriers from using line items on an end user’s bill may be in tension with our prior conclusion in the TRS context that carriers may not recover interstate TRS costs as a specifically identified line item. See supra n. 64. Although we recognize that the prohibition on line items referring to interstate TRS reflects concerns specific to TRS’s genesis in Title IV of the Americans with Disabilities Act of 1990, as noted above, we intend to revisit this TRS- related prohibition in a future proceeding in a separate docket. 87 See, e. g., Letter from John T. Scott, III, Vice President & Deputy General Counsel Regulatory Law, Verizon Wireless, to Marlene H. Dortch, Secretary, Federal Communications Commission, CG Docket No. 04- 208 and CC Docket No. 98- 170, at 5 (filed Jan. 25, 2005) (Verizon Wireless Jan. 25 Ex Parte). Such state regulations include a Vermont Public Service Board proposal to prohibit carriers from itemizing a separate charge to recover the Vermont gross receipts tax imposed on carriers, see Public Service Board Proposed Rule 7.617( c); an Indiana Utility Regulatory Commission letter prohibiting carriers from placing a line item for the Indiana Utility Receipts tax on their bills, see Letter from Christopher R. Day, Counsel, Government Affairs, Nextel, to Marlene H. Dortch, Secretary, Federal Communications Commission, CG Docket No. 04- 208 (filed Dec. 22, 2004); and a Georgia law prohibiting recovery of carrier contributions to the state universal service fund through separate charges, see NASUCA Petition at 65 n. 170. The statutory preemption we recognize in this item is not limited to these particular state rules, but would apply to other rules, now and in the future, that constitute “rate regulation” in the manner described above. 17 Federal Communications Commission FCC 05- 55 18 least one example of such a requirement. 88 That this type of line item regulation would affect a CMRS carrier’s rates and rate structure is particularly evident when considering that most CMRS carriers (as discussed in more detail below) market and price their services on a national basis. A CMRS carrier forced to adhere to a varying patchwork of state line item requirements, which require costs to be broken out or combined together in different manners, would be forced to adjust its rate structure from jurisdiction to jurisdiction. 32. While we hold that state regulation prohibiting or requiring CMRS line items constitutes preempted rate regulation, we emphasize that this preemption does not affect other areas within the states’ regulatory authority. For example, our ruling does nothing to disturb the states’ ability to require CMRS carriers to contribute to state universal service support mechanisms or to impose other regulatory fees and taxes. The Commission previously has recognized that section 254( f) of the Act authorizes states to require CMRS providers to contribute to state universal service support mechanisms – and that section 332( c)( 3) does not take this authority away. 89 Indeed, in distinguishing rate and entry regulations from “other terms and conditions,” which are not expressly preempted under section 332, Congress explained that the latter includes “such matters as customer billing information and practices and billing disputes and other consumer protection matters . . . or such other matters as fall within a state’s lawful authority.” 90 Similarly, consistent with section 601( c)( 2) of the 1996 Act, we do not read section 332( c)( 3) to limit a 88 See Verizon Wireless Jan. 25 Ex Parte at 5, citing a requirement under Colorado law, 4 Colo. Code Regs. Sec. 723- 41.2.3, which requires carriers to segregate a particular cost and collect it through “a line item on the monthly bill of each… end user.” 89 Federal- State Joint Board on Universal Service, CC Docket No. 96- 45, Report and Order, 12 FCC Rcd 8776, 9181- 82, para. 791 (1997); Pittencrieff Order, 13 FCC Rcd 1735, aff’d, CTIA v. FCC. 90 H. R. Rep. No. 111, 103d Cong., 1 st Sess., at 261 (1993). The Commission previously has recognized that state regulation of customer billing practices fall within “other terms and conditions” in section 332( c)( 3)( A). See Petition of the State Independent Alliance and the Independent Telecommunications Group for a Declaratory Ruling that the Basic Universal Service Offering Provided by Western Wireless in Kansas is Subject to Regulation as Local Exchange Service, WT Docket No. 00- 239, Memorandum Opinion and Order, 17 FCC Rcd 14802, 14805, para. 6 (2002) (Western Wireless Kansas Order); Calling Party Pays Service Offering in the Commercial Mobile Radio Services, WT Docket No. 97- 207, Declaratory Ruling and Notice of Proposed Rulemaking, 14 FCC Rcd 10861, 10881, para. 37 (1999) (Calling Party Pays NPRM). The Commission never has considered, however, where among section 332( c)( 3)( A) ’s key terms state regulation prohibiting or requiring line items should fall. We address this issue for the first time in this item and, for the reasons expressed above, find that such regulation represents rate regulation. For similar reasons, our ruling here is not at odds with the decision of the Court of Appeals for the Seventh Circuit in Fedor v. Cingular Wireless Corp., 355 F. 3d 1069 (7th Cir. 2004) (holding that challenge to wireless carrier’s billing practice was not preempted by section 332( c)( 3)( A) and thus not removable to federal court). The issue of state regulation of line items was not before that court, and we address it for the first time here. In addition, the Fedor court did not call into question the Commission's findings in the Southwestern Bell Order and the Wireless Consumers Alliance Order, which support our declaratory ruling here, and the Fedor court indeed relied on those decisions. Moreover, the court stated that, in deciding whether a billing- related claim is preempted, the proper inquiry was whether the claim requires the state court to assess what rate a carrier may charge. By addressing what may or may not be presented as part of a provider's rate, regulations of the sort we preempt here would directly affect what subscribers see as the provider's rates, which the Act expressly precludes the states from regulating. 18 Federal Communications Commission FCC 05- 55 19 state’s authority to impose taxes or other regulatory fees. 91 What section 332( c)( 3) does address, however, in precluding state regulation of a CMRS carrier’s rates, are rules that dictate whether and how CMRS carriers may incorporate these regulatory fees into their end user bills. 33. We also emphasize that not all regulation relating to a carrier's bills and its relationship with customers represents preempted "rate regulation." For example, state regulations that address the disclosure of whatever rates the CMRS provider chooses to set, 92 and the neutral application of state contractual or consumer fraud laws, are not preempted by section 332. 93 In addition, state requirements that are consistent with our federal truth- in- billing rules can coexist with these rules. 94 As with other types of state "truth in billing” regulation, however, regulation of interstate services that conflicts with federal rules and objectives may be subject to future preemption. In the Second Further Notice that we adopt in this proceeding, we seek comment on, among other things, how to define more clearly prohibited and permissible state regulation pursuant to section 332( c)( 3)( A). 95 34. Our ruling is further consistent with and supported by the Commission’s decision in the Wireless Consumers Alliance Order. In that decision, the Commission found that state court damage awards do not necessarily fall within the concept of “rates” in section 332( c)( 3)( A) because “there is no necessary correspondence between the indirect effect that monetary liability may have on a company’s behavior and the direct effect that a statute or regulatory rate requirement will have on that behavior.” 96 Here, however, we find that state regulation requiring or prohibiting the use of line items representing charges for CMRS is preempted because of its direct effect on the CMRS carrier’s rates and rate structure. 91 Telecommunications Act of 1996, Pub. L. No. 104- 104, 110 Stat. 56 (1996) (“ 1996 Act”). In particular, section 601( c)( 2) of the 1996 Act provides, with limited exceptions, that "nothing in [the 1996] Act or the amendments made by [the 1996] Act shall be construed to modify, impair, or supersede, or authorize the modification, impairment, or supersession of, any State or local law pertaining to taxation." 1996 Act, § 601( c)( 2), published as a note to 47 U. S. C. § 152; see also Promotion of Competitive Networks in Local Telecommunications Markets; Wireless Communications Association International, Inc. Petition for Rulemaking to Amend Section 1.4000 of the Commission’s Rules to Preempt Restrictions on Subscriber Premises Reception or Transmission Antennas Designed to Provide Fixed Wireless Services; Cellular Telecommunications Industry Association Petition for Rulemaking and Amendment of the Commission’s Rules to Preempt State and Local Imposition of Discriminatory and/ or Excessive Taxes and Assessments; Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Notice of Proposed Rulemaking and Notice of Inquiry in WT Docket No. 99- 217, and Third Further Notice of Proposed Rulemaking in CC Docket No. 96- 98, 14 FCC Rcd 12673 (1999). 92 See Southwestern Bell Order, 14 FCC Rcd at 19908, para. 23. 93 See Southwestern Bell Order, 14 FCC Rcd at 19903, para. 10; Western Wireless Kansas Order, 17 FCC Rcd at 14819, para. 30 n. 119. 94 See 47 C. F. R. § 64.2400( c); see also Truth- in- Billing Order, 14 FCC Rcd at 7507, para. 26 (“ states will be free to continue to enact and enforce additional regulation consistent with the general guidelines and principles set forth in this Order, including rules that are more specific than the general guidelines we adopt today”). 95 See infra paras. 49- 54. 96 Wireless Consumers Alliance Order, 15 FCC Rcd at 17034, para. 23. 19 Federal Communications Commission FCC 05- 55 20 The Commission further stated in the Wireless Consumers Alliance Order that state damage awards “may, in specific cases, be preempted by section 332[( c)( 3)( A)].” 97 As we found in the Wireless Consumers Alliance Order, here we find that “it is the substance, not merely the form” of the line item at issue that determines whether the state is engaging in rate regulation proscribed by section 332( c)( 3)( A). 98 Because “[ w] e recognize that the line between prohibited and permissible” state regulations of line items “may not always be clear,” 99 we issue a Second Further Notice seeking comment on how further to define the scope of section 332( c)( 3)( A) ’s preemption, as well as in general on where to draw the line between the Commission’s jurisdiction and states’ jurisdiction over wireless and wireline carriers’ billing practices. 35. Even setting aside the preemptive effect of section 332( c)( 3), we note that the type of state regulations described above also may be subject to preemption because they conflict with established federal policies. It is recognized widely that federal law preempts state law where, as here, the state law would “stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” 100 or of federal regulations. 101 The pro- competitive, deregulatory framework for CMRS prescribed by Congress and implemented by the Commission has enabled wireless competition to flourish, with substantial benefits to consumers. 102 In this environment, Congress has directed that the rate relationship between CMRS providers and their customers be governed “by the mechanisms of a competitive marketplace,” in which prospective rates are established by the CMRS carrier and customer in service contracts, rather than dictated by federal or state regulators. 103 To succeed in this marketplace, CMRS carriers typically operate without regard to state borders and, in contrast to wireline carriers, generally have come to structure their offerings on a national or regional basis. 104 Efforts by individual 97 Id. at 17036, para. 28. 98 Id. at 17037, para. 28. 99 Id. 100 Fidelity Federal Sav. and Loan Ass’n v. De La Cuesta, 458 U. S. 141, 153 (1982). 101 See City of New York v. FCC, 486 U. S. 57, 64 (1988); United States v. Shimer, 367 U. S. 374, 381- 382 (1961). 102 See Implementation of Section 6002( b) of the Omnibus Budget Reconciliation Act of 1993; Annual Report and Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, WT Docket No. 04- 111, Ninth Report, 19 FCC Rcd 20597, 20601, para. 4 (2004) (Ninth CMRS Market Conditions Report). 103 Wireless Consumers Alliance Order, 15 FCC Rcd at 17032- 33, paras. 20- 21; see Personal Communications Industry Association’s Broadband Personal Communications Services Alliance’s Petition for Forbearance for Broadband Personal Communications Services; Biennial Regulatory Review— Elimination or Streamlining of Unnecessary and Obsolete CMRS Regulations; Forbearance from Applying Provisions of the Communications Act to Wireless Telecommunications Carriers, WT Docket No. 98- 100, Further Forbearance from Title II Regulation for Certain Types of Commercial Mobile Radio Service Providers, GN Docket No. 94- 33, GTE Petition for Reconsideration or Waiver of a Declaratory Ruling, MSD- 92- 14, Memorandum Opinion and Order and Notice of Proposed Rulemaking, 13 FCC Rcd 16857 (1998). 104 Ninth CMRS Market Conditions Report, 19 FCC Rcd at 20644, para. 113; see also CTIA Comments at 4- 6. 20 Federal Communications Commission FCC 05- 55 21 states to regulate CMRS carriers’ rates through line item requirements thus would be inconsistent with the federal policy of a uniform, national and deregulatory framework for CMRS. Moreover, there is the significant possibility that state regulation would lead to a patchwork of inconsistent rules requiring or precluding different types of line items, which would undermine the benefits derived from allowing CMRS carriers the flexibility to design national or regional rate plans. 36. The preemption recognized above under the rate regulation provisions of section 332( c)( 3)( A) is limited to state regulations that require or prohibit the use of line items. We thus decline in this Declaratory Ruling to go as far as urged by some CMRS carriers in the record, to the extent they suggest that any state regulation affecting line items is prohibited rate structure regulation. 105 We seek comment in the Second Further Notice below regarding appropriate federal rules to govern, among other things, the description of line items, and we also ask questions about the balance between federal and state regulation on these subjects. V. SECOND FURTHER NOTICE OF PROPOSED RULEMAKING A. Introduction 37. In soliciting comment on the NASUCA Petition, we highlighted that the NASUCA Petition raised issues implicated in our Truth- in- Billing proceeding. 106 However, the broader issue of the role of states in regulating billing was addressed primarily in reply comments and ex parte submissions, and received only cursory treatment in comments on the NASUCA Petition. Given the importance and complexity of this broader issue, a second Further Notice of Proposed Rulemaking is appropriate in order to garner as complete and up- to- date a record as possible. 107 We also seek comment on other truth- in-billing issues, as specified below, and invite commenters to refresh the record on any issues from the Truth- in- Billing Further Notice that we have not addressed above. 108 B. Discussion 105 See, e. g., Verizon Wireless Jan. 25 Ex Parte at 8- 10; Letter from Leonard J. Kennedy, Senior Vice President and General Counsel, Nextel Communications, and Thomas J. Sugrue, Vice- President, Government Affairs, T- Mobile USA, to Michael K. Powell, Chairman, Federal Communications Commission, et al., CG Docket No. 04- 208, at 2, 10- 11 (filed Dec. 13, 2004) (Nextel/ T- Mobile Dec. 13 Ex Parte). 106 National Association of State Utility Consumer Advocates (NASUCA) Petition for Declaratory Ruling Regarding Truth- in- Billing and Billing Format; Comments Requested, 69 Fed. Reg. 33021 (June 14, 2004). 107 But see Verizon Wireless Jan. 25 Ex Parte at 11- 14 (suggesting that this issue is ripe for resolution now and that Administrative Procedure Act requirements have been satisfied). 108 For instance, while we do resolve above the Truth- in- Billing Further Notice’s question regarding whether 47 C. F. R. § 64.2401( b) should apply to CMRS carriers, see Truth- in- Billing Further Notice, 14 FCC Rcd at 7534- 35, paras. 68- 69, we do not decide above, however, whether 47 C. F. R. § 64.201( a)( 2) and (c) should apply in the wireless context. See Truth- in- Billing Further Notice, 14 FCC Rcd at 7535- 36, para. 70. We invite commenters to refresh the record on these issues. 21 Federal Communications Commission FCC 05- 55 22 1. Billing of Government Mandated and Non- Mandated Charges 38. In the Truth- in- Billing Order, the Commission required carriers that list charges in separate line items to identify certain of such line item charges through standard industry- wide labels and to provide full, clear and non- misleading descriptions of the nature of the charges. 109 The Commission sought comment on the specific labels that carriers should adopt, while tentatively concluding that such labels will, without unduly burdening carriers, identify adequately the charges and provide consumers with a basis for comparison among carriers. 110 In addition, while declining to formulate standardized descriptions for billed services, the Commission encouraged carriers to develop uniform terminology for such descriptions. 111 The Commission also encouraged industry and consumer groups to consider further whether some categorization of charges would be advisable. 112 39. Nearly six years after adoption of the Truth- in- Billing Order, the record reflects that consumers still experience a tremendous amount of confusion regarding their bills, 113 which inhibits their ability to compare carriers’ service and price offerings, in contravention of the pro- competitive framework of the 1996 Act. To help alleviate this situation, consistent with our prior finding, 114 as well as the recommendations of commenters such as the Ohio PUC, 115 we tentatively conclude that where carriers choose to list charges in separate line items on their customers’ bills, government mandated charges must be placed in a section of the bill separate from all other charges. We also solicit comment on how we should define the distinction between mandated and non- mandated charges for truth- in- billing purposes. a. Distinction Between Mandated and Non- Mandated 40. We solicit comment on how we should define the distinction between mandated and non-mandated charges for truth- in- billing purposes. Should we define government “mandated” charges as amounts that a carrier is required to collect directly from customers, and remit to federal, state or local governments? Under this definition, some examples of mandated charges would include state and local 109 See Truth- in- Billing Order and Further Notice, 14 FCC Rcd at 7522- 23, 7525- 26, paras. 50, 55. 110 See id. at 7537, para. 71. We will address these issues in the order that we adopt in response to this Truth- in- Billing Second Further Notice. Given that it has been over five and a half years since the comment cycle on the Truth- in- Billing Further Notice closed, we encourage commenters to refresh the record on these issues. 111 See Truth- in- Billing Order, 14 FCC Rcd at 7518- 19, para. 43. 112 See id. at 7526, para. 55. The Commission provided as an example one method that carriers may use to provide clear descriptions of services rendered would be to identify a section of the telephone bill as “long distance service,” followed by an itemized description of calls. See id. at 7517- 18, para. 41. 113 See supra paras. 16 and 24; but see Verizon Wireless Jan. 25 Ex Parte at 6 n. 27 (asserting that the record in this proceeding “contains no credible evidence that CMRS providers fail to provide consumers with clear and non- misleading information they need to make informed choices”). 114 See supra para. 27. 115 See generally, e. g., Ohio PUC Comments at 2. 22 Federal Communications Commission FCC 05- 55 23 taxes, federal excise taxes on communication services, 116 and some state E911 fees. Non- mandated charges then could be defined as comprised of government authorized but discretionary fees, which a carrier must remit pursuant to regulatory action but over which the carrier has discretion whether and how to pass on the charge to the consumer. Under this definition, some examples of non- mandated, government authorized but discretionary charges would include state Telecommunications Relay Service 117 and universal service charges. 118 Another form of non- mandated charges also would include administrative fees and other purely discretionary charges. 119 We believe that these definitions would be consistent with the settlement agreements between Attorneys General from 32 states and Verizon Wireless, Cingular Wireless, and Sprint PCS, 120 and with our precedents. For instance, discussing the universal service charge in the Truth- in- Billing Order, the Commission stated: [W] e would not consider a description of that charge as being “mandated” by the Commission or the federal government to be accurate. Instead, it is the carriers’ business decision whether, how, and how much of such costs they choose to recover directly from consumers through separately identifiable charges. Accordingly, to state or imply that the carrier has no choice regarding whether or not such a charge must be included on the bill . . . would be misleading. 121 Similarly, after discussing carrier imposition of line items for charges such as access charge recovery and universal service, the Commission expressed concern that consumers may be confused about the nature of these charges, because the “names associated with these charges as well as accompanying descriptions (or entire lack thereof) may convince consumers that all of these fees are federally mandated.” 122 116 See 26 U. S. C. § 4251. 117 See supra note 64. 118 Government authorized but discretionary charges only could include those costs that are directly related to the specific governmental program or action that the line item purports to recover. See supra para. 26. 119 Though carriers may recover such costs, we emphasize that carriers may not include such costs in the line item purporting to recover costs directly related to the specific underlying governmental program or action. For example, while carriers may recover administrative and other costs related to collection of universal service charges from end users, carriers may not include such costs as part of a line item for “regulatory fees or universal service charges.” See supra para. 28. 120 See, e. g., Verizon AVC at 14, para. 36( a), stating that on consumers’ bills, carriers will separate “taxes, fees, and other charges that [carriers are] required to collect directly from Consumers and remit to federal, state, or local governments . . . from . . . all other discretionary charges (including, but not limited to, Universal Service Fund fees).” 121 Truth- in- Billing Order, 14 FCC Rcd at 7527, para. 56 (citations omitted). The Commission further noted that its view was consistent with the then- recent decision of the Federal- State Joint Board on Universal Service recommending that the Commission “‘ prohibit carriers from depicting [universal service] charges as . . . mandated by the Commission or the federal government by terms or placement on the bill. ’” Id. (citations omitted). 122 Id. at 7524- 25, para. 53. 23 Federal Communications Commission FCC 05- 55 24 41. Another possible distinction between government mandated and non- mandated charges could be based on whether the amount listed is remitted directly to a governmental entity or its agent. 123 Pursuant to this distinction, “mandated” charges would differ from non- mandated ones in that non-mandated charges only would be composed of fees collected by carriers that go to the carrier’s coffers, and which are not directly related to any regulatory action or government program. For example, under this definition, a charge to recover universal service contributions would be considered to be government “mandated,” though a line item charge for administrative and other costs related to collection of universal service charges from end users still would be considered non- mandated. We observe that this proposed distinction is consistent with that in the CTIA Consumer Code, which states that on customers’ bills, carriers will distinguish “( a) monthly charges for service and features, and other charges collected and retained by the carrier, from (b) taxes, fees, and other charges collected by the carrier and remitted to federal, state or local governments.” 124 42. We seek comment on these potential distinctions between government mandated and non-mandated charges that we have set forth, as well as any others that commenters may wish to propose. It would be helpful if commenters indicate how whatever proposal they support is in accord with our truth-in- billing policy goals and other policy considerations, and if they address how whatever distinction and definitions they advocate comport with Commission precedents and/ or industry efforts to address billing and other consumer issues. We also encourage commenters to assess the ease or difficulty of administering any proposed distinction between government mandated and non- mandated charges. b. Separate Section for Government Mandated Charges 43. Section 64.2400( a) of the Commission’s rules provides that our truth- in- billing rules are intended “to aid customers in understanding their telecommunications bills, and to provide them with the tools they need to make informed choices in the market for telecommunications service.” 125 Section 64.2401( b) requires that descriptions of billed charges be brief, clear, non- misleading, and in plain language. 126 The Commission adopted these rules in the Truth- in- Billing Order, where it elaborated that the “proper functioning of competitive markets . . . is predicated on consumers having access to accurate, meaningful, information in a format that they can understand.” 127 The Commission further emphasized that one of the fundamental goals of the truth- in- billing principles is “to provide consumers with clear, well- organized, and non- misleading information so that they may be able to reap the advantages of 123 Charges also would be considered mandated if the government required that the funds be remitted to a quasi- governmental authority such as the Universal Service Administrative Company. 124 CTIA Consumer Code, Item Six. 125 47 C. F. R. § 64.2400( a). See also Truth- in- Billing Order, 14 FCC Rcd at 7493, para. 1; 7523, para. 50. 126 See 47 C. F. R. § 64.2401( b). In the Order above, we explicitly apply the requirements of 47 C. F. R. § 64.2401( b) to CMRS carriers. See supra paras. 16- 19. 127 Truth- in- Billing Order, 14 FCC Rcd at 7494, para. 2. See also id. at 7498, para. 8; 7519, para. 43 (“ Adopting understandable common descriptions for services offered could enable consumers to comparison shop more readily, and thereby take full advantage of the benefits of a competitive telecommunications market”). 24 Federal Communications Commission FCC 05- 55 25 competitive markets.” 128 We believe that separating government mandated charges from all other charges satisfies all of these policy goals, and will strike a balance between some carriers’ desires to explain that they incur costs associated with government programs, and the needs of consumers and regulators to assess bills accurately. At the same time, such separation will discourage a carrier from misleading consumers by recovering other operating costs as government mandated charges. We also note that the proposed rule is consistent with the relevant obligations of the aforementioned settlement agreements between Attorneys General from 32 states and Verizon Wireless, Cingular Wireless, and Sprint PCS, 129 and Verizon, Nextel and T- Mobile have acknowledged that separating taxes and other government mandated fees from non- mandated line items is appropriate. 130 We seek comment on the merits of our tentative conclusion regarding placement on bills of government mandated charges in a section separate from all other charges. c. Other Considerations 44. We seek further comment on the mechanics of placing government mandated fees and taxes in a section of a bill separate from all other charges, and we recognize that some of these specifics may depend largely on how we distinguish ultimately between government mandated and non- mandated charges. Should a bill only separate government mandated from non- mandated charges, 131 or should it require separation of categories of charges beyond merely government mandated and non- mandated? In addition, should the labeling of such categories of charges be subject to imperative national uniformity, and if so, what should these categories be called? 45. As for our proposal for standardized labeling of categories of charges, we seek comment on whether the First Amendment provides any legal impediment. We found in the Truth- in- Billing Order that so long as we do not mandate or limit specific language that carriers utilize in their descriptions of the charges, standardized labels would not violate the First Amendment. 132 As discussed above, 133 both as a matter of First Amendment law 134 and as a matter of policy, 135 our focus in this Second Report and Order, 128 Id. at 7501, para. 14. See also id. at 7498, para. 7. 129 See, e. g., Verizon AVC at 14, para. 36. 130 See Nextel/ T- Mobile Dec. 13 Ex Parte at 6 (asserting that the CTIA Consumer Code already calls for separation of government mandated and non- mandated charges on bills); Letter from Kathryn A. Zachem, Counsel for Verizon Wireless, to Marlene H. Dortch, Secretary, Federal Communications Commission, CG Docket No. 04- 208 and CC Docket No. 98- 170, at 2 (filed Dec. 2, 2004) (Verizon Wireless Dec. 2 Ex Parte) (emphasizing efforts of Verizon Wireless and the wireless industry to address “commingling” of taxes and non-mandated fees, and misleading descriptions). 131 See, e. g., California PUC Comments at 2. 132 See Truth- in- Billing Order, 14 FCC Rcd at 7530, para. 60. 133 See supra para. 3. 134 See Truth- in- Billing Order, 14 FCC Rcd at 7530- 32, paras. 60- 63. 135 See, e. g., id. at 7498, para. 7 (“ our [truth- in- billing] principles and guidelines will protect consumers from misleading and inaccurate billing practices”). 25 Federal Communications Commission FCC 05- 55 26 Declaratory Ruling, and Second Further Notice is to ensure that bills are not misleading, such that consumers can make informed decisions on carriers based on pricing and services, in furtherance of the pro- competitive goals of the 1996 Act. Do our labeling proposals address satisfactorily these legal and policy considerations? Are there any other potential legal impediments, such as interstate and intrastate jurisdictional issues, in light of the Truth- in- Billing Order’s foundation in sections 201( b) and 258 of the Act? What separate role, if any, should states have with respect to labeling and determining what labels and descriptions are misleading? 136 If we establish national rules, can we have states enforce them? 137 46. We additionally seek comment on what the pragmatic considerations are in assessing whether we should require standardized labeling of categories of charges. What would be the monetary costs of such a requirement? We encourage commenters to address this issue with utmost specificity, such as data on how many bills they generate per month, a description of what billing systems would have to be changed, and what the estimated costs of such changes would be for the number of bills they generate. We particularly seek comment on the nature of the economic impact of such a requirement on small entities, and whether the proposed requirement should be applied to them in any manner different from its application to entities that do not qualify as small entities. 138 We also welcome comment on a comparison of such costs with current costs of compliance with any state- specific billing category labeling requirements. 47. Finally, consistent with our emphasis here on ensuring that consumers’ bills are not misleading and that carriers do not misleadingly invoke government requirement or sanction of certain line items, we seek comment on whether it is misleading for carriers to include expenses such as property taxes, regulatory compliance costs, and billing expenses in line items labeled such as “regulatory assessment fees” or “universal connectivity charge.” 139 For instance, is it misleading to include billing expenses -- which at best are related tangentially to regulation – in a line item called “regulatory assessment fee”? Similarly, given that property taxes are not related to regulation under the Act of a telecommunications company’s provision of services, is it misleading to include such taxes in a “regulatory assessment fee”? In addition, we seek comment on whether surcharges identified as “regulatory assessment fees” or “cost recovery charges” are sufficiently clear and specific enough to comply with the requirements of section 64.2401( b) of our rules. 140 136 See, e. g., Minnesota DOC Comments at 2: “The Commission should recognize that states are in some cases the appropriate venues in which to handle misleading surcharges and fees . . . [and] that states play an important role in enforcing consumer protections.” The Minnesota DOC acknowledges that state jurisdiction over interexchange and wireless carriers “is limited concerning the practices complained of in the NASUCA petition,” and urges the Commission to step in and prohibit misleading charges. Id. at 3. Nevertheless, the Minnesota DOC expresses that any Commission decision on the NASUCA Petition would apply only to interstate service, and would merely “assist states” in evaluating intrastate charges. Id. at 4. 137 See also infra paras. 51 and 57. 138 See infra Appendices B and C for a discussion of what constitutes a “small entity.” 139 See supra n. 32. 140 See, e. g., NASUCA Petition at 10- 23, noting other examples of surcharges identified as “regulatory charge,” “regulatory programs fee,” “regulatory cost recovery fee,” and “telecom connectivity fee.” 26 Federal Communications Commission FCC 05- 55 27 2. Combination of Federal Regulatory Charges in Line Items 48. In the Truth- in- Billing Further Notice, the Commission sought comment on how carriers should identify line items that combine two or more federal regulatory charges into a single charge. 141 However, in the Truth- in- Billing Order, the Commission also expressed concern that where regulatory-related charges are not broken down into line items, it facilitates carriers’ ability to bury costs in lump figures. 142 In light of these conflicting considerations, as well as the record developed in response to the NASUCA Petition, 143 we now refine our proposal to seek comment on whether it is unreasonable under section 201( b) of the Act for line items to combine federal regulatory charges. 144 3. Preemption of Inconsistent State Regulation 49. As we have found in the Declaratory Ruling, state regulations requiring or prohibiting line items for CMRS bills are preempted rate regulation pursuant to section 332( c)( 3)( A) of the Act. 145 Nevertheless, in the Truth- in- Billing Order, we allowed that “states will be free to continue to enact and enforce additional regulation consistent with the general guidelines and principles set forth in this Order, including rules that are more specific than the general guidelines we adopt today.” 146 Primarily in ex parte submissions, 147 wireless carriers have argued that there are other bases for the Commission to preempt state regulation of carriers’ billing practices, and that a change in course from our pronouncement in the Truth- in- Billing Order regarding states’ roles in regulating carriers’ billing practices is necessary to stem an onslaught of state regulation that is making nationwide service more expensive for carriers to provide and raising the cost of service to consumers. 148 Moreover, these bases are necessary if we are to preempt state regulation of the billing practices of other carriers, such as IXCs, because section 332 of the Act does not apply to such wireline carriers. 141 See Truth- in- Billing Further Notice, 14 FCC Rcd at 7537, para. 71. 142 See Truth- in- Billing Order, 14 FCC Rcd at 7526, para. 55. 143 See, e. g., Global Crossing Comments at 2; MCI Comments at 5; RCA Comments at 8; NASUCA Reply at 16- 21; SBC Reply at 4. 144 Our proposal is limited to federal regulatory charges, and not state- specific ones, due to the limitations of our jurisdiction over labels involving exclusively intrastate services, pursuant to section 201( b) of the Act. See Truth- in- Billing Order, 14 FCC Rcd at 7503- 04, 7522, paras. 21, 49. Any commenter who still believes that carriers should be able to combine two or more of these charges into a single charge is welcome to refresh the record on how carriers should identify such line items. See Truth- in- Billing Further Notice, 14 FCC Rcd at 7537, para. 71. 145 See supra Section IV. B. 3. 146 Truth- in- Billing Order, 14 FCC Rcd at 7507, para. 26. 147 But see also Leap Comments at 16- 18; Nextel Comments at 35- 47. 148 See Nextel/ T- Mobile Dec. 13 Ex Parte and Verizon Wireless Jan. 25 Ex Parte at 3- 11 (citing, e. g., a Minnesota statute, regulatory actions in Colorado and Indiana, and proposed regulatory actions in New Mexico and Vermont). See also NASUCA Petition at 65 n. 170, citing a Georgia statute that NASUCA describes as prohibiting recovery of carrier contributions to the state universal service fund through separate surcharges. 27 Federal Communications Commission FCC 05- 55 28 50. We tentatively conclude that one or more of the theories discussed below provide additional support for our preemption of state billing practices regulations that are inconsistent with our truth- in-billing rules, guidelines, and principles. As we discuss herein, there are clearly discernible federal objectives that may be undermined by states’ “non- rate” regulation of CMRS carriers’ billing practices. Thus, Verizon Wireless, and Nextel and T- Mobile, argue that the Commission should preempt state regulation that conflicts with the Commission’s pro- competitive federal scheme for truth- in- billing regulation under the Act. 149 We seek comment on whether we should preempt under the Act state regulation of CMRS carriers’ billing practices, beyond the ‘line item’ regulations that we recognize in the Declaratory Ruling above. In addition, to what degree can such “conflict preemption” be applied to all carriers under the provisions of the Act and other policy frameworks? Verizon Wireless, and Nextel and T- Mobile, also suggest that requiring wireless carriers to satisfy 50 different states’ sets of rules relating to consumer disclosures and the details on bills would stifle the further development of wireless competition and unreasonably burden interstate commerce, in contravention of the U. S. Constitution’s Commerce Clause. 150 Furthermore, Leap asserts that sections 201( b) and 205( a) of the Act give the Commission “express preemptive authority over state regulatory agencies with respect to prescribing billing format and content, including line- item charges.” 151 We also seek comment on the merits of these other potential bases for Commission preemption of state regulation of carriers’ billing practices. 51. In light of our tentative conclusion that other bases exist for the Commission to preempt state regulation of carriers’ billing practices, we tentatively conclude that we should reverse our prior pronouncement that states may enact and enforce more specific truth- in- billing rules than ours. We solicit comment on this further tentative conclusion. In addition, we seek comment on, if we do adopt this further tentative conclusion, whether we should limit the scope of what constitutes “consistent truth- in-billing requirements by the states” under 47 C. F. R. § 64.2400( c), eliminate section 64.2400( c) from our rules altogether, or adopt an enforcement regime where states are permitted to enforce rules developed by the Commission. 152 149 See Nextel/ T- Mobile Dec. 13 Ex Parte at 2, 12- 14, 16 (citing City of New York, 486 U. S. at 69, in which the Supreme Court asserted the “Commission’s own power to pre- empt”); Verizon Wireless Jan. 25 Ex Parte at 5- 7, 10- 11, 14. 150 See Nextel/ T- Mobile Dec. 13 Ex Parte at 15; Verizon Wireless Jan. 25 Ex Parte at 4. 151 Leap Comments at 17 (citing 47 U. S. C. §§ 201( b), 205( a)). Section 205( a) provides in relevant part that “the Commission is authorized and empowered to determine and prescribe what will be the just and reasonable charge . . . and what classification, regulation, or practice is or will be just, fair, and reasonable. . . .” Leap adds that whether carriers can include separate line items associated with regulatory action on their bills is a “practice, classification, or regulation” under the Commission’s express authority. See Leap Comments at 17. 152 See, e. g., 47 C. F. R. § 64.1110. In this example, our rules against “slamming,” which is an unauthorized change in a subscriber’s selection of a provider of telephone exchange service or telephone toll service, provide that state commissions may elect to administer our slamming rules. In adopting these rules, however, the Commission recognized that not all states have the resources to resolve slamming complaints, or may not choose to take on such primary responsibility for administering them, so the Commission also adopted rules allowing consumers in those states to file slamming complaints with the Commission. See Implementation of the Subscriber Carrier Selection Changes Provisions of the Telecommunications Act of 1996; Policies and Rules Concerning Unauthorized Changes to Consumers Long Distance Carriers, CC Docket No. 94- 129, Corrected Version First Order on Reconsideration, 15 FCC Rcd 8158, 8169- 80, paras. 22- 43 (2000). 28 Federal Communications Commission FCC 05- 55 29 52. We believe that limiting state regulation of CMRS and other interstate carriers’ billing practices, in favor of a uniform, nationwide, federal regime, will eliminate the inconsistent state regulation that is spreading across the country, making nationwide service more expensive for carriers to provide and raising the cost of service to consumers. Accordingly, we ask commenters to address the proper boundaries of “other terms and conditions” under section 332( c)( 3)( A) of the Act, 153 and generally to delineate what they believe should be the relative roles of the Commission and the states in defining carriers’ proper billing practices. Nextel and T- Mobile, for instance, argue that we should provide that any rules we propose governing line item charges are intended to “occupy the field and preclude additional state regulation,” whether such regulation constitutes “rate and entry” regulation or regulation of “other terms and conditions” relating to line item charges. 154 They add that the CTIA Consumer Code should be adequate to occupy the field. 155 We seek comment on whether the other items of the CTIA Consumer Code not already addressed in this Second Further Notice 156 are enough to occupy the field, to the extent we occupy it. 53. In the alternative, Nextel and T- Mobile contend that in adopting section 332( c)( 3)( A) of the Act, “Congress did not preserve state authority over ‘other terms and conditions’ of wireless service, but merely made clear that by preempting rate and entry regulation it was not prohibiting state regulation of other matters.” 157 Thus, they maintain, the Commission should interpret the phrase “other terms and conditions” narrowly. They rely on the Commission’s decision in the Southwestern Bell Order, citing it for the proposition that states may not prescribe the rate elements for CMRS, and thus may properly enforce only state contractual or consumer fraud laws of neutral application. 158 On the other hand, NASUCA argues that “other terms and conditions” under section 332( c)( 3)( A) includes state regulation 153 The House Report stated that “other terms and conditions” under section 332( c)( 3)( A) include “such matters as customer billing information and practices and billing disputes and other consumer protection matters . . . or such other matters as fall within a state’s lawful authority,” H. R. Rep. No. 111, 103d Cong., 1 st Sess., at 261, and the Commission previously has recognized that under the “other terms and conditions” clause, states have a “legitimate interest . . . to regulate matters concerning aspects of consumer protection involved, e. g., in customer billing practices.” Calling Party Pays NPRM, 14 FCC Rcd at 10881, para. 37. 154 Nextel/ T- Mobile Dec. 13 Ex Parte at 11. See also id. at 12; Verizon Wireless Jan. 25 Ex Parte at 14 (asserting that the Commission should declare that section 332( c)( 3)( A) and 47 C. F. R. § 64.2400( c) “bar all state regulation of CMRS billing line items, as well as billing regulations that are inconsistent with the Commission’s rules”). 155 See Nextel/ T- Mobile Dec. 13 Ex Parte at 2, 6- 7 (citing Virginia Cellular, LLC, Petition for Designation as an Eligible Telecommunications Carrier in the Commonwealth of Virginia, 19 FCC Rcd 1563 (2004) for the proposition that the Commission should wait and see whether regulation is warranted in light of industry’s voluntary steps to improve service). 156 See supra paras. 39- 44 regarding separation of mandated charges from carrier charges. 157 Nextel/ T- Mobile Dec. 13 Ex Parte at 2 (emphasis in original). See also id. at 12; Verizon Wireless Jan. 25 Ex Parte at 3 n. 10. 158 Nextel/ T- Mobile Dec. 13 Ex Parte at 5- 6 (citing Southwestern Bell Order, 14 FCC Rcd at 19903, 19907, paras. 10, 20). They also cite the Wireless Consumers Alliance Order, 15 FCC Rcd at 17034, para. 24, in which the Commission upheld the application to the wireless industry of state laws of general applicability barring misrepresentation and breach of contract. 29 Federal Communications Commission FCC 05- 55 30 of billing and advertising practices, which “is not a regulation of the carriers’ charges”. 159 In accord with our precedents, we tentatively conclude that the line between the Commission’s jurisdiction and states’ jurisdiction over carriers’ billing practices is properly drawn to where states only may enforce their own generally applicable contractual and consumer protection laws, albeit as they apply to carriers’ billing practices. We emphasize that our tentative conclusion does not limit a state’s ability to assess taxes or create, for example, a state- specific universal service fund to which carriers must contribute. Furthermore, we believe that states’ enforcement of their own generally applicable contractual and consumer protection laws – to the extent such laws do not require or prohibit the use of line items -- would not constitute rate regulation under section 332( c)( 3)( A). 160 However, states would be preempted from enacting and enforcing specific truth- in- billing rules beyond the rules, guidelines, and principles that the Commission has adopted, and that we may adopt in an order responsive to this Second Further Notice. We seek comment on these tentative conclusions. 54. We also solicit comment on the practical reach of the line that we tentatively delineate between the Commission’s jurisdiction and states’ jurisdiction over carriers’ billing practices. For instance, Verizon Wireless cites New Mexico regulations that Verizon Wireless claims effectively bar carriers from including non- communications services on bills. 161 It also cites a California regulation that permits carriers to include non- communications services on bills, but requires them to place charges for such services in one or more separate sections of the telephone bill clearly labeled “Non- communications-related charges.” 162 Pursuant to the jurisdictional line that we delineate, do such protections against “cramming” 163 properly fall within the Commission’s jurisdiction, or within states’ jurisdiction? Finally, we ask that commenters address what affect our tentative delineation between the Commission’s jurisdiction and states’ jurisdiction over carriers’ billing practices would have on competition, both intermodal and intramodal. 4. Point of Sale Disclosure 55. The settlement agreements between Attorneys General from 32 states and Verizon Wireless, Cingular Wireless, and Sprint PCS contain numerous provisions obligating the carriers to disclose material rates and terms of service at the point of sale, whether that is at the carrier’s retail location, via 159 NASUCA Reply at 14- 15, 56- 57. 160 See supra Section IV. B. 3. 161 See Verizon Wireless Jan. 25 Ex Parte at 7 (citing N. M. Admin. Code tit. 17, §§ 13. 7. 6. 2 and 13. 9. 3). 162 See Verizon Wireless Jan. 25 Ex Parte at 7 (citing California PUC Rule Part 4, H( 2) of General Order No. 168). Though the California PUC has stayed its order establishing consumer protection rules governing telephone and wireless marketing and sales practices, it stated that “[ i] n no way” does the stay impact the PUC’s enforcement of the existing interim rules governing billing for non- communications- related charges, of which the substance of Rule Part 4, H( 2) is part. See Order Instituting Rulemaking on the Commission’s Own Motion to Establish Consumer Rights and Consumer Protection Rules Applicable to All Telecommunications Utilities, Order Modifying Decision 04- 05- 057, California PUC Decision 05- 01- 058, at 4 (rel. Jan. 27, 2005). 163 Cramming is the submission or inclusion of unauthorized, misleading, or deceptive charges for products or services on subscribers’ telephone bills. 30 Federal Communications Commission FCC 05- 55 31 the carrier’s website, or during a telephone conversation between the carrier and a consumer. 164 Furthermore, we note that some carriers independently have expressed support for point of sale disclosure rules. 165 In accord with these agreements, and in order to ensure that these obligations apply nationwide to all carriers, we tentatively conclude that carriers must disclose the full rate, including any non-mandated line items and a reasonable estimate of government mandated surcharges, to the consumer at the point of sale. For instance, providing only a wide range of potential surcharges at the point of sale could be misleading. 166 In this regard, would actual government mandated surcharges in excess of 25 percent greater than estimated government mandated surcharges be misleading? Would it be misleading if such actual surcharges were in excess of 10 percent greater than such estimated surcharges? 56. We further tentatively conclude that such disclosure at the point of sale must occur before the customer signs any contract for the carrier’s services. We believe that a disclosure after contract signing, when most CMRS carriers lock customers into long- term contracts subject to significant early termination fees, may thwart our pro- competition goal of enabling consumers to make informed comparisons of different carriers’ plans before subscribing. 167 We seek comment on our tentative conclusions regarding point of sale disclosures. We also seek comment on whether the aforementioned provisions of the settlement agreements between Attorneys General from 32 states and Verizon Wireless, Cingular Wireless, and Sprint PCS establish an appropriate framework for any point of sale disclosure rules that we may adopt; and, if not, how the terms of the settlement agreements should be amended, or why we should refrain from codifying these provisions in the first place. We particularly seek comment on the effect of these tentative conclusions on small entities, and on whether it would be appropriate to apply whatever provisions we adopt to small entities in the same manner that we apply them to entities that do not qualify as small. 168 57. Finally, we solicit comment on whether we should adopt an enforcement regime where states are permitted to enforce rules developed by the Commission regarding point of sale disclosures. For example, our rules against slamming provide that state commissions may elect to administer our slamming rules. In adopting these rules, however, the Commission recognized that not all states have the resources to resolve slamming complaints, or may not choose to take on such primary responsibility for 164 See, e. g., Verizon AVC at 5- 9, paras. 17- 23. 165 See, e. g., Verizon Wireless Dec. 2 Ex Parte at 2 166 See, e. g., NJ Comments at 3 (stating that additional charges can increase consumers’ bills by nearly 50 percent over the advertised rate); OPCDC Comments at 9- 10 (maintaining that in many instances, consumers must pay 20 to 30 percent more than originally quoted by a carrier’s customer service representative); and TracFone Reply Comments at 6 (contending that the average wireless consumer spends $17.75 per month above the advertised price of the monthly plan; “Most of these additional amounts are attributable to line items on carrier bills – charges not explained to the customers prior to signing service agreements”). We seek comment on what constitutes a reasonable estimate of government mandated surcharges at the point of sale. 167 We also believe that disclosure prior to contract signing is consistent with the terms of the settlement agreements, which provide that “Carrier shall during a Sales Transaction . . . disclose clearly and conspicuously to Consumers all material terms and conditions of the offer to be purchased.” Verizon AVC at 5, para. 17 (emphasis added). 168 See infra Appendices B and C for a discussion of what constitutes a “small entity.” 31 Federal Communications Commission FCC 05- 55 32 administering them, so the Commission also adopted rules allowing consumers in those states to file slamming complaints with the Commission. 169 In this regard, we ask whether our slamming rules provide a good model for rules that we may develop for point of sale disclosures. If we adopt an enforcement regime akin to that in our slamming rules, should we also establish rules prescribing specific penalty amounts and procedures for point of sale disclosure violations, like the penalty provisions in our slamming rules? 170 We encourage commenters to address how states can administer the process of any penalty scheme that we establish. VI. PROCEDURAL ISSUES A. Ex Parte Presentations for Second Further Notice of Proposed Rulemaking 58. This proceeding shall be treated as a “permit but disclose” proceeding in accordance with the Commission’s ex parte rules, 47 C. F. R. § 1.1200 et seq. Persons making oral ex parte presentations are reminded that memoranda summarizing the presentations must contain summaries of the substance of the presentations and not merely a listing of the subjects discussed. More than a one or two sentence description of the views and arguments presented is generally required. See 47 C. F. R. § 1.1206( b). Other rules pertaining to oral and written ex parte presentations in permit- but- disclose proceedings are set forth in section 1.1206( b) of the Commission’s rules, 47 C. F. R. § 1.1206( b). B. Paperwork Reduction Act 59. The Second Report and Order contains new 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 information collection requirements contained in this proceeding. 60. In this present document, we conclude that CMRS carriers should no longer be exempt from 47 C. F. R. § 64.2401( b) – requiring that billing descriptions be brief, clear, non- misleading and in plain language. To the extent that any CMRS carrier is not currently in compliance with this requirement, certain modifications to the carrier’s billing practices may be required. 61. In addition, the Second Further Notice of Proposed Rulemaking contains proposed new information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and OMB to comment on the information collection requirements proposed in this Second Further Notice, as required by the Paperwork Reduction Act of 1995, Public Law 104- 13. Public and agency comments are due 60 days after the date of publication of this Second Further Notice in the Federal Register. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission’s burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. In addition, pursuant to the 169 See supra n. 152. 170 See, e. g., 47 C. F. R. §§ 64.1140- 70. 32 Federal Communications Commission FCC 05- 55 33 Small Business Paperwork Relief Act of 2002, Public Law 107- 198, see 44 U. S. C. § 3506( c)( 4), we seek specific comment on how we might “further reduce the information collection burden for small business concerns with fewer than 25 employees.” C. Congressional Review Act 62. The Commission will send a copy of this Second Report and Order, Declaratory Ruling, and Second Further Notice of Proposed Rulemaking in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U. S. C. § 801( a)( 1)( A). D. Filing of Comments and Reply Comments 63. Pursuant to sections 1.415 and 1.419 of the Commission’s rules, 47 C. F. R. §§ 1.415, 1.419, interested parties may file comments in this proceeding on or before the 30th day after publication of this Second Further Notice of Proposed Rulemaking in the Federal Register, and reply comments may be filed on or before the 60th day after publication of this Second Further Notice of Proposed Rulemaking in the Federal Register. When filing comments, please reference CC Docket No. 98- 170 and CG Docket No. 04- 208. Comments may be filed using the Commission’s Electronic Comment Filing System (ECFS) or by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63 Fed. Reg. 24121 (1998). Comments filed through the ECFS can be sent as an electronic file via the Internet to http:// www. fcc. gov/ e- file/ ecfs. html. Generally, only one copy of an electronic submission must be filed. In completing the transmittal screen, commenters should include their full name, U. S. Postal Service mailing address, and the applicable docket or rulemaking number( s). Parties also may submit an electronic comment by Internet e- mail. To get filing instructions for e- mail comments, commenters should send e- mail to ecfs@ fcc. gov, and should include the following words in the body of the message, “get form .” A sample form and directions will be sent in reply. 64. Parties who choose to file by paper must send an original and four (4) copies of each filing. Filings can be sent by hand or messenger delivery, by electronic media, by commercial overnight courier, or by first- class or overnight U. S. Postal Service mail (although we continue to experience delays in receiving U. S. Postal Service mail). The Commission’s contractor, Natek, Inc., will receive hand-delivered or messenger- delivered paper filings or electronic media for the Commission’s Secretary at 236 Massachusetts Avenue, N. E., Suite 110, Washington, D. C. 20002. The filing hours at this location are 8: 00 a. m. to 7: 00 p. m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building. Commercial and electronic media 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 mail, Express Mail, and Priority Mail should be addressed to 445 12 th Street, S. W., Washington, D. C. 20554. All filings must be addressed to the Commission’s Secretary, Marlene H. Dortch, Office of the Secretary, Federal Communications Commission, 445 12 th Street, SW, Room TW- B204, Washington, DC 20554. 65. The full text of this document and copies of any subsequently filed documents in this matter will be available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12 th Street, SW, Room CY- A257, Washington, DC 20554, (202) 418- 0270. This document may be purchased from the Commission’s duplicating contractor, Best Copy and Printing, Inc., Portals II, 445 12 th Street, SW, Room CY- B402, Washington, DC 20554. Customers may contact BCPI, Inc. at their web site: www. bcpiweb. com or by calling 1- 800- 378- 3160. 33 Federal Communications Commission FCC 05- 55 34 E. Accessible Formats 66. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an e- mail to fcc504@ fcc. gov or call the Consumer & Governmental Affairs Bureau at (202) 418- 0530 (voice) or (202) 418- 0432 (TTY). This Second Report and Order, Declaratory Ruling, and Second Further Notice of Proposed Rulemaking also can be downloaded in Word and Portable Document Format (PDF) at http:// www. fcc. gov/ cgb/ policy. F. Regulatory Flexibility Analysis 67. Pursuant to the Regulatory Flexibility Act of 1980, as amended, 171 the Commission’s Final Regulatory Flexibility Analysis regarding the Second Report and Order is attached as Appendix B. G. Initial Regulatory Flexibility Analysis 68. Pursuant to the Regulatory Flexibility Act of 1980, as amended, 172 the Commission’s Initial Regulatory Flexibility Analysis regarding the Second Further Notice of Proposed Rulemaking is attached as Appendix C. VII. ORDERING CLAUSES 69. Accordingly, IT IS ORDERED that, pursuant to the authority contained in sections 1- 4, 201, 202, 206- 208, 258, 303( r), and 332 of the Communications Act of 1934, as amended; 47 U. S. C. §§ 151- 154, 201, 202, 206- 208, 258, 303( r), and 332; section 601( c) of the Telecommunications Act of 1996; and sections 1.421, 64.2400 and 64.2401 of the Commission’s Rules, 47 C. F. R. §§ 1.421, 64.2400, and 64.2401, the SECOND REPORT AND ORDER, DECLARATORY RULING, AND SECOND FURTHER NOTICE OF PROPOSED RULEMAKING ARE ADOPTED, and Part 64 of the Commission’s rules, 47 C. F. R. § 64.2400, IS AMENDED as set forth in Appendix A. 70. IT IS FURTHER ORDERED that the rules and requirements contained in this Second Report and Order and in Appendix A attached hereto SHALL BECOME EFFECTIVE within 90 days of their publication in the Federal Register. 71. IT IS FURTHER ORDERED that the Petition for Declaratory Ruling filed by the National Association of State Utility Consumer Advocates on March 30, 2004, IS DENIED to the extent provided herein. 72. IT IS FURTHER ORDERED that the Commission’s Consumer & Governmental Affairs Bureau, Reference Information Center, SHALL SEND a copy of the Second Report and Order, Declaratory Ruling, and Second Further Notice of Proposed Rulemaking, including the Final and Initial Regulatory Flexibility Analyses, to the Chief Counsel for Advocacy of the Small Business Administration. FEDERAL COMMUNICATIONS COMMISSION 171 5 U. S. C. §§ 601 et seq. 172 5 U. S. C. §§ 601 et seq. 34 Federal Communications Commission FCC 05- 55 35 Marlene H. Dortch Secretary 35 Federal Communications Commission FCC 05- 55 36 APPENDIX A Rule Change Part 64 of the Code of Federal Regulations is amended as follows: PART 64 – MISCELLANEOUS RULES RELATING TO COMMON CARRIERS 1. The authority citation 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. * * * * * Subpart Y – Truth- in- Billing Requirements for Common Carriers 2. Section 64.2400( b) is revised to read as follows: § 64.2400 Purpose and scope. (a) * * * (b) These rules shall apply to all telecommunications common carriers, except that §§ 64.2401( a)( 2) and 64.2401( c) shall not apply to providers of Commercial Mobile Radio Service as defined in §20.9 of this chapter, or to other providers of mobile service as defined in §20.7 of this chapter, unless the Commission determines otherwise in a further rulemaking. * * * * * 36 Federal Communications Commission FCC 05- 55 37 APPENDIX B SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ANALYSIS 1. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), 173 an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Further Notice of Proposed Rulemaking released by the Federal Communications Commission (Commission) on May 11, 1999. 174 The Commission sought written public comments on the proposals contained in the FNPRM, including comments on the IRFA. Comments filed in this proceeding specifically identified as comments addressing the IRFA and comments that address the impact of the proposed rules and policies on small entities are discussed below. The 1999 Truth- in- Billing Order and Further Notice included a Final Regulatory Flexibility Analysis (FRFA) that conformed to the RFA. 175 This present supplemental FRFA addresses only the modification to section 64.2400( b) of our rules adopted in this Second Report and Order, and conforms to the RFA. 176 A. Need for, and Objectives of, the Order 2. In a 1999 Further Notice of Proposed Rulemaking, the Commission sought comment on whether the truth- in- billing rules adopted in the wireline context should apply to CMRS carriers in order to protect consumers. 177 In the 1999 Truth- in- Billing Order, the Commission concluded that the broad principles adopted to promote truth- in- billing should apply to all telecommunications carriers, both wireline and wireless. 178 The Commission noted that these principles represent fundamental statements of fair and reasonable practices. In the wireline context, the Commission incorporated these principles and guidelines into rules for enforcement purposes “after considering an extensive record of both the nature and volume of customer complaints, as well as substantial information about wireline billing practices.” 179 3. In the wireless context, however, the Commission found that the record at that time did not reflect the same high volume of customer complaints nor did the record indicate that CMRS billing practices failed to provide consumers with the clear and non- misleading information they need to make 173 See 5 U. S. C. § 603. The RFA, see 5 U. S. C. §§ 601- 612, has been amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Pub. L. No. 104- 121, Title II, 110 Stat. 857 (1996). 174 See Truth- in- Billing and Billing Format, CC Docket No. 98- 170, First Report and Order and Further Notice of Proposed Rulemaking, 14 FCC Rcd at 7550- 52 at paras. 105- 111. 175 Truth- in- Billing Order, 14 FCC Rcd at 7537- 7550, paras. 72- 103. 176 See 5 U. S. C. § 604. The requirements of the RFA do not extend to the issues set forth in the Declaratory Ruling. Thus, we do not address those issues herein. 177 Truth- in- Billing Order, 14 FCC Rcd at 7535- 36, paras. 68- 70. 178 Truth- in- Billing Order, 14 FCC Rcd at 7501, para. 13 (“[ l] ike wireline carriers, wireless carriers also should be fair, clear, and truthful in their billing practices.”). 179 Truth- in- Billing Order, 14 FCC Rcd at 7501, para. 15. 37 Federal Communications Commission FCC 05- 55 38 informed choices. 180 The Commission therefore exempted CMRS carriers from the truth- in- billing rule that requires charges contained on telephone bills to be accompanied by a brief, clear, non- misleading, plain language description of the service or services rendered. 181 We believe that making the requirements of 47 C. F. R. § 64.2401( b) mandatory for CMRS will help to ensure that wireless consumers receive the information that they require to make informed decisions in a competitive marketplace. B. Summary of Significant Issues Raised by Public Comments in Response to the IRFA. 4. The Office of Advocacy filed comments specifically addressing the proposed rules and policies presented in the 1999 Truth- in Billing Order FRFA and IRFA. 182 In general, the Office of Advocacy argued that the Commission’s FRFA and IRFA’s were flawed due to vagueness. As the Commission has previously stated, however, we believe the Truth- in- Billing Order and regulatory flexibility analysis contained therein appropriately considered and balanced the concerns of carriers that detailed rules may increase costs against our goal of protecting consumers from fraud. 183 Moreover, we note that the scope of this Second Report and Order is significantly more limited than the 1999 Truth- in-Billing Order and the issues that Office of Advocacy addressed in its comments. The majority of commenters addressing the limited issue presented in the Second Report and Order, representing primarily CMRS providers, responded that the lack of billing complaints against wireless providers along with the competitive nature of the wireless industry should indicate that it is not necessary to apply these rules to CMRS. 184 Several state commissions, consumer organizations, and individual commenters, however, argued that many consumers were confused by their telephone bills including charges included on their CMRS bills. C. Description and Estimate of the Number of Small Entities to Which the Rules Will Apply 5. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the rules adopted herein. 185 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 186 In addition, the term “small business” has the same meaning as 180 Truth- in- Billing Order, 14 FCC Rcd at 7502, para. 16. The Commission also noted that notwithstanding the decision not to apply these guidelines to CMRS providers, that such providers remain subject to the reasonableness and nondiscrimination requirements of sections 201 and 202, “and our decision here in no way diminishes such obligations as they may relate to billing practices of CMRS carriers.” See Truth- in- Billing Order, 14 FCC Rcd at 7502, para. 19. 181 See 47 C. F. R. §§ 64.2400( b), 64.2401( b). 182 See, e. g. Office of Advocacy, U. S. Small Business Administration 1999 Reply Comments; 183 Truth- in- Billing Order on Reconsideration, 15 FCC Rcd at 6031, para. 20. 184 See, e. g., Bell Atlantic Mobile 1999 Comments at 3; CTIA 1999 Comments at 5; PCIA 1999 Comments 4- 5; 185 5 U. S. C. § 604( a)( 3). 186 5 U. S. C. § 601( 6) 38 Federal Communications Commission FCC 05- 55 39 the term “small business concern” under the Small Business Act. 187 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) satisfies any additional criteria established by the Small Business Administration (SBA). 188 6. Wireless Service Providers. The SBA has developed a small business size standard for wireless firms within the two broad economic census categories of “Paging” 189 and “Cellular and Other Wireless Telecommunications.” 190 Under both SBA categories, a wireless business is small if it has 1,500 or fewer employees. For the census category of Paging, Census Bureau data for 1997 show that there were 1,320 firms in this category, total, that operated for the entire year. 191 Of this total, 1,303 firms had employment of 999 or fewer employees, and an additional 17 firms had employment of 1,000 employees or more. 192 Thus, under this category and associated small business size standard, the great majority of firms can be considered small. For the census category Cellular and Other Wireless Telecommunications, Census Bureau data for 1997 show that there were 977 firms in this category, total, that operated for the entire year. 193 Of this total, 965 firms had employment of 999 or fewer employees, and an additional 12 firms had employment of 1,000 employees or more. 194 Thus, under this second category and size standard, the great majority of firms can, again, be considered small. 187 5 U. S. C. § 601( 3) (incorporating by reference the definition of “small- business concern” in the Small Business Act, 15 U. S. C. § 632). Pursuant to 5 U. S. C. § 601( 3), the statutory definition of a small business applies “unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comments, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition( s) in the Federal Register.” 188 15 U. S. C. § 632. 189 13 C. F. R. § 121.201, NAICS code 517211. 190 13 C. F. R. § 121.201, NAICS code 517212. 191 U. S. Census Bureau, 1997 Economic Census, Subject Series: “Information,” Table 5, Employment Size of Firms Subject to Federal Income Tax: 1997, NAICS code 513321 (issued October 2000). 192 U. S. Census Bureau, 1997 Economic Census, Subject Series: “Information,” Table 5, Employment Size of Firms Subject to Federal Income Tax: 1997, NAICS code 513321 (issued October 2000). The census data do not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is “Firms with 1000 employees or more.” 193 U. S. Census Bureau, 1997 Economic Census, Subject Series: “Information,” Table 5, Employment Size of Firms Subject to Federal Income Tax: 1997, NAICS code 513322 (issued October 2000). 194 U. S. Census Bureau, 1997 Economic Census, Subject Series: “Information,” Table 5, Employment Size of Firms Subject to Federal Income Tax: 1997, NAICS code 513322 (issued October 2000). The census data do not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is “Firms with 1000 employees or more.” 39 Federal Communications Commission FCC 05- 55 40 D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities. 7. In this present document, we conclude that CMRS carriers should no longer be exempt from 47 C. F. R. § 64.2401( b) – requiring that billing descriptions be brief, clear, non- misleading and in plain language. To the extent that any CMRS carrier is not currently in compliance with this requirement, certain modifications to the carriers’ billing practices would be required. Such modifications would include reviewing existing bills and making changes as necessary to ensure that any billing descriptions are clear, non- misleading, and in plain language as required by section 64.2401( b) of our rules. E. Steps Taken to Minimize the Significant Economic Impact on Small Entities, and Significant Alternatives Considered 8. 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. 9. We have considered several alternatives to our decision to remove the exemption for CMRS carriers from 47 C. F. R. § 64.2400( b) including retaining that exemption or forbearing from that requirement under section 10 of the Act. Section 64.2401( b) requires that billing descriptions be brief, clear, non- misleading and in plain language. Although the Commission decided in 1999 to exempt CMRS carriers from the requirements of section 64.2401( b), the Commission nevertheless stated that the underlying principle (i. e. bills must be clear and non- misleading) should apply to wireless carriers and sought further comment on whether such requirement should be made mandatory to CMRS in the future. In addition, the Commission concluded that sections 201( b) and 202 would continue to apply to wireless billing practices. 10. The record in this proceeding, including comments of several states and individual consumers and the Commission’s own complaint data, leads us to conclude that many wireless consumers are confused by the billing practices of their CMRS provider. As a result, we have decided to require CMRS providers to comply with our requirement that billing practices be clear, brief, and non- misleading. Many CMRS providers have indicated in this proceeding that they already comply with this requirement. As noted above, the identical underlying truth- in- billing principle and sections 201 and 202 have always applied to CMRS providers. Thus, we believe that the burden on CMRS carriers in complying with this requirement will be negligible. 11. REPORT TO CONGRESS: The Commission will send a copy of the Second Report and Order, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act. 195 In addition, the Commission will send a copy of the Second Report and Order, including this FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Second Report and Order and FRFA (or summaries thereof) will also be published in the Federal Register. 196 195 See 5 U. S. C. § 801( a)( 1)( A). 196 See 5 U. S. C. § 604( b). 40 Federal Communications Commission FCC 05- 55 41 41 Federal Communications Commission FCC 05- 55 42 APPENDIX C INITIAL REGULATORY FLEXIBILITY ANALYSIS 1. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), 197 the Commission has prepared this present Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies and rules proposed in this Second Further Notice of Proposed Rulemaking (Second Further Notice). Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the Second Further Notice provided above in section VI( D). The Commission will send a copy of the Second Further Notice, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration. See 5 U. S. C. § 603( a). In addition, this Second Further Notice and the IRFA (or summaries thereof) will be published in the Federal Register. A. Need for, and Objectives of, the Proposed Rules 2. The Commission determined that significant consumer concerns with the billing practices of wireless and other interstate providers raised in this proceeding, and outstanding issues from the 1999 Truth- in- Billing Order and Further Notice, necessitate that we clarify certain aspects of our existing rules and policies affecting billing for telephone service. Consumer confusion over telephone bills inhibits the ability of consumers to compare carriers’ service offerings, thus undermining the proper functioning of competitive markets for telecommunications services, in contravention of the pro- competitive framework prescribed by Congress in the 1996 Act. Therefore, we propose and seek comment on additional measures to facilitate the ability of telephone consumers to make informed choices among competitive telecommunications service offerings. 3. In particular, we seek comment on the distinction between government “mandated” and other charges, and tentatively conclude that where carriers choose to list charges in separate line items on their customers’ bills, government mandated charges must be placed in a section of the bill separate from all other charges. We also seek comment on whether it is unreasonable to combine federal regulatory charges into a single line item, though any commenter who still believes that carriers should be able to combine two or more of these charges into a single charge is welcome to refresh the record on how carriers should identify such line items. 4. Furthermore, we tentatively conclude that carriers must disclose the full rate, including any non- mandated line items and a reasonable estimate of government mandated surcharges, to the consumer at the point of sale, and that such disclosure must occur before the customer signs any contract for the carrier’s services. 5. These proposed rules are designed to discourage misleading billing practices, and thereby aid consumers in understanding their telecommunications bills, providing them with the tools they need to make informed choices in the market for telecommunications service. 197 5 U. S. C. § 603. The RFA, see 5 U. S. C. §§ 601- 612, has been amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Pub. L. No. 104- 121, Title II, 110 Stat. 857 (1996). 42 Federal Communications Commission FCC 05- 55 43 B. Legal Basis 6. The legal basis for any action that may be taken pursuant to this Second Further Notice is contained in sections 1- 4, 201, 202, 206- 208, 258, 303( r), and 332 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151- 154, 201, 202, 206- 208, 258, 303( r), and 332; section 601( c) of the Telecommunications Act of 1996; and sections 1.421, 64.2400, and 64.2401 of the Commission’s rules, 47 C. F. R. §§ 1.421, 64.2400, and 64.2401. C. Description and Estimate of the Number of Small Entities to Which the Proposed Rules Will Apply 7. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. 198 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 199 In addition, the term “small business” has the same meaning as the term “small business concern” under Section 3 of the Small Business Act. 200 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) satisfies any additional criteria established by the Small Business Administration (SBA). 201 8. We have included small incumbent LECs in this RFA analysis. As noted above, a “small business” under the RFA is one that, inter alia, meets the pertinent small business size standard (e. g., a wireline telecommunications business having 1,500 or fewer employees), and “is not dominant in its field of operation.” 202 The SBA’s Office of Advocacy contends that, for RFA purposes, small incumbent LECs are not dominant in their field of operation because any such dominance is not “national” in scope. 203 We therefore have included small incumbent LECs in this RFA analysis, although we emphasize that this RFA action has no effect on the Commission’s analyses and determinations in other, non- RFA contexts. 198 See 5 U. S. C. § 603( b)( 3). 199 5 U. S. C. § 601( 6). 200 5 U. S. C. § 601( 3) (incorporating by reference the definition of “small business concern” in the Small Business Act, 15 U. S. C. § 632). Pursuant to 5 U. S. C. § 601( 3), the statutory definition of a small business applies “unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definitions( s) in the Federal Register.” 201 15 U. S. C. § 632. 202 13 C. F. R. § 121.201, NAICS code 517110. 203 See Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to Chairman William E. Kennard, FCC (May 27, 1999). The Small Business Act contains a definition of “small business concern,” which the RFA incorporates into its own definition of “small business.” See 5 U. S. C. § 632( a) (Small Business Act); 5 U. S. C. 601( 3) (RFA). SBA regulations interpret “small business concern” to include the concept of dominance on a national basis. 13 C. F. R. § 121.102( b). 43 Federal Communications Commission FCC 05- 55 44 9. Incumbent Local Exchange Carriers. Neither the Commission nor the SBA has developed a small business size standard for providers of incumbent local exchange services. The closest applicable size standard under the SBA rules is for Wired Telecommunications Carriers. Under that standard, such a business is small if it has 1,500 or fewer employees. 204 According to the FCC’s Telephone Trends Report data, 1,310 incumbent local exchange carriers reported that they were engaged in the provision of local exchange services. 205 Of these 1,310 carriers, an estimated 1,025 have 1,500 or fewer employees and 285 have more than 1,500 employees. 206 Consequently, the Commission estimates that the majority of providers of local exchange service are small entities that may be affected by the rules and policies adopted herein. 10. Competitive Local Exchange Carriers and Competitive Access Providers. Neither the Commission nor the SBA has developed specific small business size standards for providers of competitive local exchange services or competitive access providers (CAPs). The closest applicable size standard under the SBA rules is for Wired Telecommunications Carriers. Under that standard, such a business is small if it has 1,500 or fewer employees. 207 According to the FCC’s Telephone Trends Report data, 563 companies reported that they were engaged in the provision of either competitive access provider services or competitive local exchange carrier services. 208 Of these 563 companies, an estimated 472 have 1,500 or fewer employees, and 91 have more than 1,500 employees. 209 Consequently, the Commission estimates that the majority of providers of competitive local exchange service and CAPs are small entities that may be affected by the rules. 11. Local Resellers. The SBA has developed a specific size standard for small businesses within the category of Telecommunications Resellers. Under that standard, such a business is small if it has 1,500 or fewer employees. 210 According to the FCC’s Telephone Trends Report data, 127 companies reported that they were engaged in the provision of local resale services. 211 Of these 127 companies, an estimated 121 have 1,500 or fewer employees, and six have more than 1,500 employees. 212 Consequently, the Commission estimates that the majority of local resellers may be affected by the rules. 12. Toll Resellers. The SBA has developed a specific size standard for small businesses within 204 13 C. F. R. § 121.201, NAICS code 517110. 205 FCC, Wireline Competition Bureau, Industry Analysis and Technology Division, Trends in Telephone Service, at Table 5.3, p. 5 - 5 (May 2004) (Telephone Trends Report). This source uses data that are current as of October 22, 2003. 206 Id. 207 13 C. F. R. § 121.201, NAICS code 517110. 208 Telephone Trends Report, Table 5.3. The data are grouped together in the Telephone Trends Report. 209 Id. 210 13 C. F. R. § 121.201, NAICS code 517310. 211 Telephone Trends Report, Table 5.3. 212 Id. 44 Federal Communications Commission FCC 05- 55 45 the category of Telecommunications Resellers. Under that SBA definition, such a business is small if it has 1,500 or fewer employees. 213 According to the FCC’s Telephone Trends Report data, 645 companies reported that they were engaged in the provision of toll resale services. 214 Of these 645 companies, an estimated 619 have 1,500 or fewer employees, and 26 have more than 1,500 employees. 215 Consequently, the Commission estimates that a majority of toll resellers may be affected by the rules. 13. Interexchange Carriers. Neither the Commission nor the SBA has developed a specific size standard for small entities specifically applicable to providers of interexchange services. The closest applicable size standard under the SBA rules is for Wired Telecommunications Carriers. Under that standard, such a business is small if it has 1,500 or fewer employees. 216 According to the FCC’s Telephone Trends Report data, 281 carriers reported that their primary telecommunications service activity was the provision of interexchange services. 217 Of these 281 carriers, an estimated 254 have 1,500 or fewer employees, and 27 have more than 1,500 employees. 218 Consequently, we estimate that a majority of interexchange carriers may be affected by the rules. 14. Operator Service Providers. Neither the Commission nor the SBA has developed a size standard for small entities specifically applicable to operator service providers. The closest applicable size standard under the SBA rules is for Wired Telecommunications Carriers. Under that standard, such a business is small if it has 1,500 or fewer employees. 219 According to the FCC’s Telephone Trends Report data, 21 companies reported that they were engaged in the provision of operator services. 220 Of these 21 companies, an estimated 20 have 1,500 or fewer employees, and one has more than 1,500 employees. 221 Consequently, the Commission estimates that a majority of operator service providers may be affected by the rules. 15. Other Toll Carriers. Neither the Commission nor the SBA has developed a size standard for small entities specifically applicable to “Other Toll Carriers.” This category includes toll carriers that do not fall within the categories of interexchange carriers, operator service providers, prepaid calling card providers, satellite service carriers, or toll resellers. The closest applicable size standard under the SBA rules is for Wired Telecommunications Carriers. Under that standard, such a business is small if it has 1,500 or fewer employees. 222 According to the FCC’s Telephone Trends Report data, 65 carriers reported that 213 13 C. F. R. § 121.201, NAICS code 517310. 214 Telephone Trends Report, Table 5.3. 215 Id. 216 13 C. F. R. § 121.201, NAICS code 517110. 217 Telephone Trends Report, Table 5.3. 218 Id. 219 13 C. F. R. § 121.201, NAICS code 517110. 220 Telephone Trends Report, Table 5.3. 221 Id. 222 13 C. F. R. § 121.201, NAICS code 517110. 45 Federal Communications Commission FCC 05- 55 46 they were engaged in the provision of “Other Toll Services.” 223 Of these 65 carriers, an estimated 62 have 1,500 or fewer employees, and three have more than 1,500 employees. 224 Consequently, the Commission estimates that a majority of “Other Toll Carriers” may be affected by the rules. 16. Wireless Service Providers. The SBA has developed a small business size standard for wireless firms within the two broad economic census categories of “Paging” 225 and “Cellular and Other Wireless Telecommunications.” 226 Under both SBA categories, a wireless business is small if it has 1,500 or fewer employees. For the census category of Paging, Census Bureau data for 1997 show that there were 1,320 firms in this category, total, that operated for the entire year. 227 Of this total, 1,303 firms had employment of 999 or fewer employees, and an additional 17 firms had employment of 1,000 employees or more. 228 Thus, under this category and associated small business size standard, the great majority of firms can be considered small. For the census category Cellular and Other Wireless Telecommunications, Census Bureau data for 1997 show that there were 977 firms in this category, total, that operated for the entire year. 229 Of this total, 965 firms had employment of 999 or fewer employees, and an additional 12 firms had employment of 1,000 employees or more. 230 Thus, under this second category and size standard, the great majority of firms can, again, be considered small. D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities 17. As noted, we tentatively conclude that where carriers choose to list charges in separate line items on their customers’ bills, government mandated charges must be placed in a section of the bill separate from all other charges; and that carriers must disclose the full rate, including any non- mandated line items and a reasonable estimate of government mandated surcharges, to the consumer at the point of sale. Furthermore, we seek comment on whether it is unreasonable to combine federal regulatory charges 223 Telephone Trends Report, Table 5.3. 224 Id. 225 13 C. F. R. § 121.201, NAICS code 517211. 226 13 C. F. R. § 121.201, NAICS code 517212. 227 U. S. Census Bureau, 1997 Economic Census, Subject Series: “Information,” Table 5, Employment Size of Firms Subject to Federal Income Tax: 1997, NAICS code 513321 (issued October 2000). 228 U. S. Census Bureau, 1997 Economic Census, Subject Series: “Information,” Table 5, Employment Size of Firms Subject to Federal Income Tax: 1997, NAICS code 513321 (issued October 2000). The census data do not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is “Firms with 1000 employees or more.” 229 U. S. Census Bureau, 1997 Economic Census, Subject Series: “Information,” Table 5, Employment Size of Firms Subject to Federal Income Tax: 1997, NAICS code 513322 (issued October 2000). 230 U. S. Census Bureau, 1997 Economic Census, Subject Series: “Information,” Table 5, Employment Size of Firms Subject to Federal Income Tax: 1997, NAICS code 513322 (issued October 2000). The census data do not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is “Firms with 1000 employees or more.” 46 Federal Communications Commission FCC 05- 55 47 into a single line item. However, we also tentatively conclude that the Commission should reverse its prior holding permitting states to enact and enforce telecommunications carrier- specific truth- in- billing rules. This tentative conclusion is designed to address the potential for inconsistent state regulation of CMRS and other interstate carrier billing practices, and thereby simplify the requirements for such carriers’ compliance with potentially disparate billing regulations. Aside from simplifying procedural compliance requirements for small entities, we expect that this measure also will alleviate some compliance costs for small entities. E. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered 18. 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 such 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. 231 19. As described above, we seek comment on the distinction between government “mandated” and other charges, and tentatively conclude that where carriers choose to list charges in separate line items on their customers’ bills, government mandated charges must be placed in a section of the bill separate from all other charges. We also seek comment on whether it is unreasonable to combine federal regulatory charges into a single line item, though any commenter who still believes that carriers should be able to combine two or more of these charges into a single charge is welcome to refresh the record on how carriers should identify such line items. Furthermore, we tentatively conclude that carriers must disclose the full rate, including any non- mandated line items and a reasonable estimate of government mandated surcharges, to the consumer at the point of sale, and that such disclosure must occur before the customer signs any contract for the carrier’s services. For each of these issues and tentative conclusions, we seek comment on the effects our proposals would have on small entities, and whether any rules that we adopt should apply differently to small entities. 20. For instance, the Second Further Notice seeks comment on whether the Commission should require standardized labeling of categories of charges on consumers’ bills, and what the monetary costs of such a requirement would be. We particularly seek comment on the nature of the economic impact of such a requirement on small entities, and whether the proposed requirement should be applied to them in any manner different from its application to entities that do not qualify as small entities. 232 In addition, we tentatively conclude that carriers must disclose the full rate, including any non- mandated line items and a reasonable estimate of government mandated surcharges, to the consumer at the point of sale, and that such disclosure must occur before the customer signs any contract for the carrier’s services. We specifically seek comment on the effect of these tentative conclusions on small entities, and on whether it would be appropriate to apply whatever provisions we adopt to small entities in the same manner that we 231 5 U. S. C. § 603( c)( 1)-( c)( 4). 232 See supra para. 46. 47 Federal Communications Commission FCC 05- 55 48 apply them to entities that do not qualify as small. 233 21. We do not have any evidence before us at this time regarding whether proposals outlined in this Second Further Notice would, if adopted, have a significant economic impact on a substantial number of small entities. However, we recognize that mandating changes to the format of consumers’ bills, and specific point of sale disclosures, likely would result in additional burdens on small CMRS providers and other interstate carriers. We therefore seek comment on the potential impact of these proposals on small entities, and whether there are any less burdensome alternatives that we should consider. F. Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rules 22. In seeking comment on our tentative conclusion that government mandated charges should be placed in a section of the bill separate from all other charges, where carriers choose to list charges in separate line items on their customers’ bills, we note that: 1) section 64.2400( a) of the Commission’s rules provides that our truth- in- billing rules are intended “to aid customers in understanding their telecommunications bills, and to provide them with the tools they need to make informed choices in the market for telecommunications service”; and 2) section 64.2401( b) requires that descriptions of billed charges be brief, clear, non- misleading, and in plain language. We seek comment on our stated belief that separating government mandated charges from all other charges satisfies the policy goals embedded in these rules. 234 Though any rules that we may adopt to implement this tentative conclusion thus may overlap somewhat with 47 C. F. R. §§ 64.2400( a) and 64.2401( b), we believe that these new rules would complement the existing rules, rather than duplicating them or conflicting with them. 23. In tentatively concluding that bases other than the rate regulation proscription of section 332( c)( 3)( A) exist for the Commission to preempt state regulation of carriers’ billing practices, we tentatively conclude further that we should reverse our prior pronouncement that states may enact and enforce more specific truth- in- billing rules than ours. In large part, this pronouncement has been embodied by the substance of 47 C. F. R. § 64.2400( c). We seek comment on, if we do adopt this further tentative conclusion, whether we should limit the scope of what constitutes “consistent truth- in- billing requirements by the states” under 47 C. F. R. § 64.2400( c), eliminate section 64.2400( c) from our rules altogether, or adopt an enforcement regime where states are permitted to enforce rules developed by the Commission. 235 Thus, our tentative conclusions may conflict with 47 C. F. R. § 64.2400( c), or may overlap with that rule in a manner in which the existing rule may be harmonized with our tentative conclusions. 233 See supra para. 56. 234 See supra para. 43. 235 See supra para. 51. 48 Federal Communications Commission FCC 05- 55 49 APPENDIX D LIST OF COMMENTERS AND REPLY COMMENTERS Due to the significant number of comments filed by individual consumers in this proceeding, we have listed below only those comments received from industry, consumer advocacy groups and governmental entities. All individual consumer comments filed in this proceeding are available for inspection on the Commission’s Electronic Comment Filing System (ECFS). American Association of Retired Persons AARP AT& T Corporation AT& T AT& T Wireless Services, Inc. AWS BellSouth Corporation BellSouth California Public Utilities Commission CPUC Cingular Wireless LLC Cingular Coalition for a Competitive Telecommunications Market CCTM Consumers Union et al. Consumers Union CTIA – The Wireless Association CTIA District of Columbia, Office of the People’s Counsel OPCDC Florida Public Service Commission Florida PSC Global Crossing North America, Inc. Global Crossing IDT America, Corp. IDT Indiana Office of Utility Consumer Counselor Indiana OUCC Indiana Utility Regulatory Commission Indiana URC Iowa Utilities Board Iowa UB Leap Wireless International, Inc. Leap Massachusetts Office of the Attorney General Massachusetts OAG MCI, Inc. MCI Minnesota Department of Commerce Minnesota DOC National Association of Regulatory Utility Commissioners NARUC National Association of State Utility Consumer Advocates NASUCA National Consumers League Consumers League National Telecommunications Cooperative Association NTCA New Jersey Division of the Ratepayer Advocate NJ Nextel Communications, Inc. and Nextel Partners, Inc. Nextel Public Utilities Commission of Ohio Ohio PUC Rural Cellular Association RCA Rural Telecommunications Group, Inc. RTG Rural Wireline Carriers RWC Satellite Receivers, Cash Depot, and David Charles Satellite Receivers SBC Communications, Inc. SBC Sprint Sprint Telecommunications Research and Action Center TRAC Teletruth Teletruth Tennessee Emergency Communications Board TECB Texas, State of (Office of the Attorney General of Texas) Texas OAG The Utility Reform Network and Utility TURN & UCAN Consumers Action Network 49 Federal Communications Commission FCC 05- 55 50 T- Mobile USA, Inc. T- Mobile TracFone Wireless, Inc. TracFone United States Cellular Corporation USCC United States Communications Association USCA United States Telecommmunications Association USTA Verizon Communications Inc. Verizon Verizon Wireless Verizon Wireless 50 Federal Communications Commission FCC 05- 55 51 SEPARATE STATEMENT OF CHAIRMAN MICHAEL K. POWELL RE: Truth- in- Billing and Billing Format (CC Docket No. 98- 170); National Association of State Utility Consumer Advocates’ Petition for Declaratory Ruling (CG Docket No. 04- 208), Second Report and Order, Declaratory Ruling, and Second Further Notice of Proposed Rulemaking. Wireless consumers deserve accurate, meaningful billing information in a format they can understand. Today’s item places the power of choice in the hands of the American consumer by eliminating the current exemption for CMRS carriers from providing customers’ with brief, clear and non- misleading billing descriptions, and makes additional clarifications to our existing truth- in- billing rules to facilitate the provision of accurate consumer information. Today’s item also opens the door for public comment on additional measures to facilitate the ability of consumers to make informed choices among competitive telecommunications service offerings. Moreover, our proposal that carriers must disclose the full rate at the point of sale would ensure that consumers are given information at a critical time that they can use it in evaluating their competitive choices, and is especially important where early contract termination fees apply. Nonetheless, as Congress recognized, wireless service is inherently an interstate service. As a result, it is simply not sustainable to have a multitude of divergent, and at times intrusive, state- by- state billing regulations. Targeted federal regulation that applies to all carriers protects consumers and allows those carriers with national rate plans, such as IXCs and CMRS providers, to operate. However, no action that we take in this Order and the Declaratory Ruling below limits states’ authority to enforce their own generally applicable consumer protection laws, to the extent such laws do not require or prohibit use of line items. Indeed, like our approach to voice over Internet protocol, we envision an active state partnership in enforcing whatever further rules and guidelines are adopted in this proceeding. 51 Federal Communications Commission FCC 05- 55 52 STATEMENT OF COMMISSIONER KATHLEEN Q. ABERNATHY Re: Truth- in- Billing and Billing Format, CC Docket No. 98- 170; National Association of State Utility Consumer Advocates’ Petition for Declaratory Ruling Regarding Truth- in- Billing, CG Docket No. 04- 208, Order, Declaratory Ruling, and Second Further Notice of Proposed Rulemaking. Today’s decision reflects the Commission’s important and ongoing role in ensuring that consumers are provided with clear and non- misleading information in their telephone bills. I have frequently argued that the robustly competitive nature of the wireless industry obviates the need for many forms of regulation. So I approach the prospect of imposing new truth- in- billing requirements with some skepticism. I support this item, however, because it strikes an appropriate balance by avoiding burdensome regulation, while recognizing the strong governmental interest in ensuring that consumers fully understand their options. Indeed, consumers can only benefit from the varied and innovative services a competitive market offers if they can make informed choices. While this Order increases carriers’ regulatory oversight somewhat at the federal level, it will produce a more streamlined regime overall by preempting state regulations that impede the delivery of pro- competitive benefits to consumers. Consistent with the practices of most CMRS carriers, this order mandates that billing practices, including line items, be truthful and non- misleading. The phenomenal growth in consumer use of wireless phones reflects the success of the market in delivering a valuable product. At the same time, however, over the past few years, we have seen an increase in the number of complaints received with respect to wireless carriers. By removing any ambiguity regarding CMRS providers’ responsibility to provide clear and non- misleading billing information to their customers, we are strengthening the ability of consumers to shop around and compare prices. With regard to the preemption aspect of today’s decision, it is important to remember that the amazing success of the wireless industry is due in large part to the foresight of Congress in establishing a comprehensive and consistent national regulatory framework for wireless providers. Congress mandated a uniform national regulatory policy for CMRS, not a policy balkanized by individual state decisions. Under this structure, not only is the FCC given the exclusive authority to regulate rates and entry of wireless carriers, but it also is vested with the flexibility, through the exercise of its forbearance authority, to promote competitive market conditions. This framework for CMRS has provided significant benefits to consumers by creating effective competition among wireless providers and spurring innovations such as regional and national calling plans. The Commission must continue to ensure that state regulations do not undermine congressional intent by imposing unnecessary regulatory burdens that would dampen the benefits of wireless competition to consumers. Even given this clear congressional mandate, I do not approach preemption of state regulatory authority lightly. In this case, we appropriately conclude that the state regulations in question amount to impermissible rate regulation. We also narrowly define our preemption to address only those state regulations that either require or prohibit the use of line items. The item makes clear that nothing in our action today limits states’ ability to assess taxes or create, for example, a state- specific universal service fund to which carriers must contribute. The NASUCA petition, which brought these issues before us, proposes sweeping and overbroad regulation that not only would frustrate Congress’s and the Commission’s important federal goals with 52 Federal Communications Commission FCC 05- 55 53 respect to the wireless industry, but also would threaten to harm consumer welfare. This would be a step backwards and would frustrate carriers’ ability to communicate clearly with their customers. If we did not preempt the type of regulations at issue, we could seriously hinder the wireless industry’s ability to offer consumers flexible and innovative regional or national rate plans. Government should not impede the relationship between consumers and their providers. I also want to make clear that nothing in this item diminishes the recognition that state governments play a critical role in protecting consumers, particularly through enforcement of generally applicable provisions that bar fraud and deceptive practices. Indeed, we specifically seek comment on additional truth- in- billing requirements and the proper role of states and the Commission in carrier billing practices. I look forward to creating a full record on these important issues and to working with my state colleagues to ensure American consumers have access to the information they need. 53 Federal Communications Commission FCC 05- 55 54 SEPARATE STATEMENT OF COMMISSIONER MICHAEL J. COPPS, APPROVING IN PART, DISSENTING IN PART Re: Truth- in- Billing and Billing Format; National Association of State Utility Consumer Advocates’ Petition for Declaratory Ruling Regarding Truth- in- Billing, Order, Declaratory Ruling and Second Further Notice of Proposed Rulemaking (CC Docket No. 98- 170, CG Docket No. 04- 208) My starting point here is that competitive communications markets function best when consumers have access to accurate and meaningful information. When end users have the facts— and have access to those facts in an understandable format— they can make informed choices. Too often, we know, that’s not the case. Most phone bills make my point. It’s baffling how complicated they are. The explosion of new services and the line items and fees accompanying them have made it more difficult than ever for consumers to compare rates and shop around. You need an accountant or a lawyer— preferably both— to root out what you’re being charged for and why. This is what led NASUCA last year to file a Petition for Declaratory Ruling. NASUCA asked the Commission to prohibit carriers from imposing line items unless the charges are mandated by government action. This is perhaps not the cure for all of our billing ills. It could actually have the unintended effect of inhibiting national wireless one- rate plans. Nevertheless, this petition was the ideal vehicle for the Commission to initiate a fresh dialogue on how to make bills more honest, readable and easy to understand. I don’t believe we are taking advantage of this opportunity. We take one step forward by applying basic truth- in- billing to wireless services. That’s good. Then, amazingly, given the language we hear today on how pro- consumer this Order is, the majority proceeds to put the kibosh on state consumer protection efforts. Now I support the decision to require that wireless carrier billing descriptions be brief, clear and non- misleading. But I must dissent to the majority’s decision to preempt state efforts to curb line item abuses or to require that such charges be explained. The majority says preemption is compelled by the law. This is an incredibly cramped interpretation that ignores the plain meaning of the statute. Congress specifically prohibited states from regulating wireless “rates” but reserved for states the ability to regulate “other terms and conditions.” State efforts to curtail or require line item explanations are not exercises in ratemaking. The legislative history bears me out. It describes the “other terms and conditions” reserved for the states as “such matters as customer billing information and practices.” The majority blows breezily by the will of Congress in pursuit of its fixation— or at least its present curious flirtation— with federal preemption. The majority says that preemption does not preclude state laws of general applicability. Commenters here tell us that state laws as diverse as the Texas Deceptive Trade Practices Act and the Vermont Universal Service Fund Collection Statute may be preempted. Tennessee may find that its billing mechanism to support enhanced 911 services is suddenly suspect. The record suggests that the fate of Washington State’s 911 funding system may be similarly uncertain. Indiana’s effort to curb line item abuses through that state’s Utility Receipts Act may be cut short, and Maine’s initiative to make wireless service pricing more transparent is now in question. Many other states may lose authority over consumer billing complaints. It will take some time for states to survey the debris from this erosion of cooperative federalism. And there may be further wreckage on the horizon, because in the Notice of 54 Federal Communications Commission FCC 05- 55 55 Proposed Rulemaking accompanying today’s Order, the majority tentatively concludes that it should preempt all state laws involving billing clarity that are more extensive than our minimal federal requirements. As I understand it, this could even apply to wireline as well as to wireless bills. The majority says that with the states preempted, the Commission will not hesitate to enforce its truth- in- billing requirements. But to date all the Commission has done is hesitate. In the six years since adoption of our truth- in- billing requirements, I cannot find a single Notice of Apparent Liability concerning the kind of misleading billing we are talking about today— the only ones I find involve slamming. Yet in the last year alone, the Commission received over 29,000 non- slamming consumer complaints about phone bills. So we are very likely doing more harm than good here. Lots of people agree with me. Nearly 14,000 consumers have written the Commission urging us not to take this kind of action. Their concerns are echoed in the comments of the AARP, Consumers Union, the National Consumer Law Center, the Massachusetts Union of Public Housing Tenants, the National Consumers League, the Governor of Maine, the Maine Department of Attorney General, the Massachusetts Office of the Attorney General, the Utility Reform Network, the Utility Consumers Action Network, the Vermont Public Service Board, the Minnesota Department of Commerce, the Office of the People’s Counsel for the District of Columbia, the Indiana Utility Regulatory Commission, the Office of the Attorney General of Texas, the Tennessee Emergency Communications Board, the Iowa Utilities Board, the New Jersey Division of the Ratepayer Advocate, the National Association of State Utility Commissioners and others. Yet we forge ahead, bypassing the opportunity NASUCA gave us to rein in incomprehensible bills. I’m afraid consumers will remember that when they called this Commission for help understanding their phone bills, we hung up. 55 Federal Communications Commission FCC 05- 55 56 STATEMENT OF COMMISSIONER JONATHAN S. ADELSTEIN APPROVING IN PART, DISSENTING IN PART Re: Truth- In- Billing Format, National Association of State Utility Consumer Advocates’ Petition for Declaratory Ruling Regarding Truth- In- Billing, Order, Declaratory Ruling, and Second Further Notice of Proposed Rulemaking, CC Docket No. 98- 170, CG Docket No. 04- 208. In March of last year, a national coalition of consumer advocates, the National Association of State Utility Consumer Advocates (NASUCA), petitioned the Commission, asking the Commission to strengthen its “Truth- in- Billing” rules, which apply to the “line item” charges that are listed separately on consumer telephone bills. NASUCA asked the Commission to address the proliferation of line item charges and to ensure that consumers get accurate information about the total cost of the telecommunications services. In this Order, the Commission largely rejects NASUCA’s petition, missing a golden opportunity to provide clarity for consumers. I dissent in part from this item because I am concerned that the Commission turns the consumer advocates’ petition on its head and strips away existing consumer protections without putting in place adequate alternative measures. While the Commission has previously acknowledged the benefits of certain clear and non-misleading line items on consumer bills, many consumer advocates suggest, and the Commission’s data seems to confirm, growing levels of consumer complaints about billing for the telecommunications services. Consumer groups, like AARP, have argued that a proliferation of line item charges makes it difficult for consumers to determine the actual price for their telecommunications service and that this price confusion is a costly issue for consumers. These concerns are at the heart of NASUCA’s petition. Unfortunately, from the consumer’s perspective, the most tangible result of this Order will likely be less oversight of consumers’ bills, not more. By preempting States, our historic partners in consumer protection, this Order curtails States’ ability to moderate line items on consumers’ wireless phone bills. The merits and timing of this preemption are questionable, and I cannot support this portion of the Order. The result for consumers, who routinely turn to state public utility commissions for help with billing issues, is very likely less oversight and more confusion, which is hardly the result sought by consumer advocates. By removing the States’ role here, the FCC has set itself up as the sole arbiter of line item charges. This result is not compelled by the Act, which removes States’ ability to set rates for wireless service, but preserves States’ ability to address “other terms and conditions,” which include billing issues. State commissions offered evidence in this record that they are confronted regularly with a myriad of new line item surcharges and new names for existing line items. Similarly, the Commission’s existing Truth- in- Billing rules preserved States’ ability to adopt consistent requirements, until now. Yet, the Commission reverses course here without even putting this proposal out for comment. The one measured step in this Order for consumers is the decision to explicitly apply the Commission’s Truth- in- Billing rules to wireless carriers. I support this effort to clarify that wireless service bills must be clearly organized and must provide full and non- misleading descriptions of charges. But clarifying that these rules apply to wireless bills alone is unlikely to be a panacea for consumers. The FCC’s current Truth- in- Billing rules have not been the basis for a single Notice of Apparent Liability in the six plus years that they have been in effect. 56 Federal Communications Commission FCC 05- 55 57 I am sympathetic to carriers’ desire to advertise national rate plans and believe that goal is not irreconcilable with the desire to make consumer bills accurate and clear. Carriers have raised legitimate questions about which government- related charges should be separated out through line items and about the practical difficulties they face in fashioning national rate plans. Yet, this Order does not address which line items should be permitted and whether there are any practical limits to the amount of charges that can be added on above the advertised price. The item leaves for a Further Notice most of the hard questions for carriers and consumers: what costs should carriers be able to separate out through line items? When are line items helpful for consumers, and when do they simply add “noise” that distracts consumers from the ultimate cost of service? Since we are leaving these issues unanswered, it strikes me as premature at best to take away resources available to consumers by preempting State laws and regulations that might moderate the proliferation of line item charges. I am also troubled by the majorities’ tentative conclusions in the attached Further Notice to impose far greater preemption of State oversight of consumer protection and carrier billing practices for both wireless and traditional landline telephone service. The consumer advocates’ petition calls for additional clarification about our rules, not a reduction in the resources available to consumers. Particularly when it comes to consumer protection, this Commission should be looking for partners in our efforts, not looking for ways to eliminate them. For these reasons, I approve in part and dissent in part. 57