*Pages 1--10 from Microsoft Word - 46924.doc* Federal Communications Commission FCC 05- 60 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of Sprint Communications Company, LP Verification of Orders for Telecommunications Services ) ) ) ) ) ) File No. EB- 03- TC- 056 NAL/ Acct. No. 200532170004 FRN: 0004056636 ORDER Adopted: March 10, 2005 Released: March 11, 2005 By the Commission: 1. In this Order, we adopt the attached Consent Decree entered into between the Federal Communications Commission (“ the Commission”) and Sprint Communications Company, LP (“ Sprint”). The Consent Decree terminates an investigation into possible violations by Sprint of sections 201( b) and 258 of the Communications Act of 1934, as amended (the “Act”), 1 and section 64. 1120 of the Commission’s rules. 2 2. The Commission and Sprint have negotiated the terms of a Consent Decree that would terminate the investigation. A copy of the Consent Decree is attached hereto and incorporated by reference. 3. We have reviewed the terms of the Consent Decree and evaluated the facts before us. We find that the public interest would be served by approving the Consent Decree and terminating the investigation. We also conclude that, in the absence of material new information not previously disclosed to the Commission, the matters raised in the investigation do not raise any substantial and material questions of fact regarding Sprint’s qualifications to be a Commission licensee. 4. Accordingly, IT IS ORDERED, pursuant to section 4( i) of the Communications Act, 47 U. S. C. § 154( i), that the attached Consent Decree is hereby ADOPTED. 5. IT IS FURTHER ORDERED that the Secretary SHALL SIGN the Consent Decree on behalf of the Commission. 1 47 U. S. C. §§ 201( b) and 258. 2 See 47 C. F. R. §§ 64. 1120( a)( 1)( ii), (c)( 3)( iv). 1 Federal Communications Commission FCC 05- 60 2 6. IT IS FURTHER ORDERED that the above captioned investigation is TERMINATED. FEDERAL COMMUNICATIONS COMMISSION Marlene H. Dortch Secretary 2 Federal Communications Commission FCC 05- 60 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of Sprint Communications Company L. P. Verification of Orders for Telecommunications Services ) ) ) ) ) ) File No. EB- 03- TC- 056 NAL/ Acct. No.: 0004056636 FRN: 0004056636 CONSENT DECREE I. INTRODUCTION 1. The Federal Communications Commission (the “FCC” or “Commission”) and Sprint Communications Company L. P. (“ Sprint” or the “Company”), by their authorized representatives, hereby enter into this Consent Decree to resolve an investigation by the Commission regarding possible non-compliance with the requirements of sections 201( b) and 258 of the Communications Act of 1934, as amended (the “Act”), and section 64.1120 of the Commission’s rules. 1 2. The Commission initiated this investigation based on consumer complaints filed with the Commission and state agencies 2 and later included within the investigation complaints raised directly with Sprint by consumers. In a number of instances, the complaints alleged that after consumers conducted transactions in Sprint PCS retail stores, the consumers’ intraLATA, interLATA, international, and in some cases, local exchange services were changed to Sprint allegedly without the consumers’ authorization. The investigation subsequently disclosed that Sprint is unable to produce records in a number of instances to prove that the Company followed the Commission’s verification procedures prior to submitting preferred carrier changes on behalf of consumers. The vast majority of those instances involved complaints made directly with Sprint. II. DEFINITIONS 3. For purposes of this Consent Decree, the following definitions shall apply: a. “Adopting Order” means an Order of the Commission adopting the terms and conditions of this Consent Decree without change, addition, or modification, and formally terminating the above- captioned Investigation. b. “Bureau” means the Enforcement Bureau of the Federal Communications Commission. c. The “FCC” or the “Commission” means the Federal Communications Commission and all Commissions and Offices of the Commission, including the Enforcement Bureau. d. “Effective Date” means the date on which the Commission adopts the Adopting Order. 1 47 U. S. C. §§ 201( b), 258; 47 C. F. R. § 64. 1120. 2 The states include Massachusetts, Minnesota, Nevada, New Jersey, and Ohio. 3 Federal Communications Commission FCC 05- 60 2 e. “Investigation” means the investigation commenced by the Enforcement Bureau’s Letter of Inquiry dated October 6, 2003, 3 and includes all complaints filed against Sprint alleging that Sprint violated sections 201( b) or 258 of the Act or section 64.1120 of the Commission’s rules by engaging in conduct at Retail Stores through the Effective Date that resulted in unauthorized changes in the subscribers’ preferred carrier for Residential Wireline Long Distance Services. f. “Operational Audit” means an audit conducted on- site at a Sprint PCS store by finance personnel and includes the examination of whether store managers and sales representatives are complying with Sprint's methods and procedures governing sales of Sprint products and services at such stores. g. “Parties” means Sprint and the Commission. h. “Residential Wireline Long Distance Services” means residential wireline long distance services currently sold at Retail Stores. Residential Wireline Long Distance Services do not include VoIP or other, similar services not previously offered in Retail Stores. i. “Retail Stores” means the following retail stores that sell Residential Wireline Long Distance Services in conjunction with Sprint PCS services: Sprint PCS, PCS affiliate, and RadioShack stores. j. “Sprint” or the “Company” means directors, officers, employees, agents or any other person acting under, by, through, or on behalf of Sprint Communications Company L. P., directly or indirectly, or through any corporate or other device, including any subsidiaries, affiliates, and successors. k. “Sales Representative” means an individual that markets services on behalf of Sprint in Retail Stores. III. AGREEMENT 4. Sprint agrees that the Commission has jurisdiction over it and the subject matter contained in this Consent Decree and the authority to enter into and adopt this Consent Decree and settle the Investigation in its entirety. The Consent Decree covers the sale of Residential Wireline Long Distance Services through (except where otherwise noted) Sprint PCS retail stores on and after the Effective Date. 5. The Parties agree and acknowledge that this Consent Decree shall constitute a full and final settlement of the Investigation. The commitments undertaken herein have been or will be effectuated pursuant to the terms of the Consent Decree. In express reliance on the covenants and representations contained herein, and in order to avoid the further expenditure of scarce public resources, the Commission agrees to terminate the Investigation. In consideration of the termination of this Investigation and in 3 Letter from Colleen K. Heitkamp, Chief, Telecommunications Consumers Division, Enforcement Bureau, FCC, to Norina T. Moy, Director, Federal Regulatory Policy and Coordination, Sprint Communications Company, L. P. (October 6, 2003) . See also Letter from Colleen K. Heitkamp, Chief, Telecommunications Consumers Division, Enforcement Bureau, FCC to Norina T. Moy, Director, Federal Regulatory Policy and Coordination, Sprint Communications Company, L. P. (December 11, 2003); Letter from Colleen K. Heitkamp, Chief, Telecommunications Consumers Division, Enforcement Bureau, FCC to Michael B. Fingerhut, General Attorney, Federal Regulatory Policy and Coordination, Sprint Communications Company, L. P. (April 29, 2004) (collectively referred to as the “Bureau’s LOIs to Sprint”). 4 Federal Communications Commission FCC 05- 60 3 accordance with the terms of this Consent Decree, Sprint agrees to the terms, conditions, and procedures contained herein, without further recourse to a trial de novo. The Commission agrees that, in the absence of new material evidence not previously disclosed to the Commission, (1) the matters raised in the Investigation do not raise any substantial and material questions of fact regarding Sprint’s qualifications to be a Commission licensee; and (2) the Commission will not on its own motion initiate any inquiries, investigations, forfeiture proceedings, hearings, or other actions, formal or informal, against Sprint concerning matters that were the subject of this Investigation, or seek on its own motion any administrative or other penalties from Sprint based on this Investigation. The Commission also agrees that it will not use the facts developed in this Investigation to take any action on its own motion against Sprint with respect to its basic qualifications, including its character qualifications, to be a Commission licensee. Consistent with the foregoing, nothing in this Consent Decree limits the Commission’s authority to consider and adjudicate any complaint that may be filed pursuant to section 208 of the Act 4 and to take any action otherwise authorized by the Act. 6. The Parties agree that this Consent Decree does not constitute either an adjudication on the merits or a factual or legal finding or determination regarding any compliance or non- compliance by Sprint with the requirements of the Act and the Commission’s rules. The Parties agree that this Consent Decree is for settlement purposes only and that by agreeing to this Consent Decree, Sprint does not admit or deny liability for violating the Act or the Commission’s rules in connection with the matters that are the subject of this Consent Decree. 7. In consideration of the termination of this Investigation and in accordance with the terms of this Consent Decree, Sprint agrees to the terms, conditions, and procedures contained herein, which concern the sale of Residential Wireline Long Distance Services in Sprint PCS retail stores and where explicitly indicated below in all Retail Stores. 5 Unless otherwise noted, beginning 60 days after the Effective Date of the Consent Decree, Sprint agrees to implement the Compliance Plan delineated below. Nothing in this Compliance Plan shall alter Sprint’s obligation to comply otherwise with the Act and the Commission’s rules and orders, subject to paragraph 13 below. Accordingly, Sprint agrees to: a. Payment - Make a voluntary contribution to the United States Treasury in the amount of four million dollars ($ 4,000,000). The payment shall be made within thirty (30) calendar days after the Effective Date. The payment shall be made by check, wire transfer, or money order drawn to the order of the Federal Communications Commission, and each check, wire transfer, or money order must refer to the NAL Acct. No. and FRN No. identified above. If Sprint makes this payment by check or money order, it must mail the check or money order to: Forfeiture Collection Section, Finance Branch, Federal Communications Commission, P. O. Box 73482, Chicago, IL, 60673- 7482. Payment by overnight mail may be sent to Bank One/ LB 73482, 525 West Monroe, 8 th Floor Mailroom, Chicago, IL 60661. If Sprint chooses to make this payment by wire transfer, payment may be made to ABA Number 071000013, receiving bank Bank One, and account number 1165259; b. Marketing - In Retail Stores, implement and/ or maintain a process change to include a confirmation card that will be given to consumers at the time the transaction occurs in order to clearly inform them that signing a Letter of Agency (“ LOA”) or completing a third party verification call (“ TPV”) to change a subscriber’s Residential Wireline Long Distance Service will mean that the wireline long distance service( s) will be changed to 4 47 U. S. C. § 208. 5 For Retail Stores located in the areas where Sprint is the incumbent local exchange carrier, this Consent Decree only relates to the sale of Residential Wireline Long Distance Service products that are also sold in Sprint PCS stores located outside such areas. 5 Federal Communications Commission FCC 05- 60 4 Sprint for any residential wireline telephone number( s) provided by the consumer. The confirmation card will state that the service in question is for “home long distance service” and not PCS wireless service. The confirmation card will be provided in sales training materials. If TPV is used for verification, a consumer also will be notified and requested to confirm during the TPV that the service at issue is for “home long distance service.” Sprint further agrees that within thirty (30) days after the Effective Date, the Company will submit to the Commission copies of the language to be used in the confirmation card and TPVs; c. Employee Training – Ensure that new Sales Representatives employed in the Sprint PCS stores will complete training regarding selling Residential Wireline Long Distance Services within thirty (30) days of beginning their employment. The training will include Sprint’s sales procedures and emphasize Sprint’s prohibitions regarding deceptive marketing practices and unauthorized switches of preferred carriers; guidelines for ethical behavior in making retail sales; and Commission rules regarding procedures carriers must follow prior to submitting or executing a change in a consumer’s preferred long distance service provider. Sprint also agrees to require Sales Representatives employed by Sprint to complete refresher training on Sprint’s sales procedures and guidelines for ethical sales behavior, including information on using the Sprint Ethics Helpline as a means of reporting conduct that may violate Sprint’s sales procedures, at least twice a year; d. Training of Sales Representatives not employed by Sprint – For those Retail Stores not owned by Sprint, provide sales training materials which shall include Sprint’s sales procedures and emphasize Sprint’s zero- tolerance policy for slamming and deceptive marketing practices. The training materials shall also include the notification language in the confirmation card referenced in Paragraph 7( b) above and an overview of Sprint’s guidelines for ethical behavior in making retail sales. Sprint further agrees to use its commercially reasonable best efforts to include a training requirement in new contracts with any retailer selling Sprint’s Residential Wireline Long Distance Services in conjunction with its PCS services. The training requirement shall provide that, at a minimum, agents are to make the training materials available to Sales Representatives and disclose that Sprint monitors compliance with the Company’s policies; e. Third Party Verification/ LOAs - For Retail Stores, implement and/ or maintain a process under which a PIC change order for Residential Wireline Long Distance Services purchased in a Retail Store will not be submitted unless either (a) there is TPV of the sale; or (b) the written (paper or electronic) LOA has been submitted to a centralized verification organization for review and approval. On all sales except those in Hawaii, the verification will include an affirmative statement confirming the subscriber’s understanding that by agreeing to change his home long distance service to Sprint, Sprint will also become the subscriber’s provider of international services. f. Record Retention – Unless or until all Residential Wireline Long Distance Services sales purchased in a Retail Store are confirmed by TPV, maintain a process under which all LOAs that will be used to demonstrate compliance with verification procedures will be stored at a centralized location or repository managed by Sprint. TPVs will be stored by each TPV verifier as is customary; g. Sales Process –Implement and/ or maintain a sales process designed to enable Sales Representatives to place subscribers on the appropriate domestic and international calling plans when selling Residential Wireline Long Distance Services in Retail Stores; 6 Federal Communications Commission FCC 05- 60 5 h. Post Sales Confirmation – Upon a sale of its Residential Wireline Long Distance Service( s) in a Retail Store, confirm authorization of Sprint as the subscriber’s preferred carrier by sending to each customer a “welcome kit” that identifies the subscriber of record for the Sprint account, the service plan( s) selected by the subscriber, the services selected, the customer service telephone number, terms and conditions of the service( s), and information regarding what to do in the event of an unauthorized preferred carrier change; i. Sprint Call Center Complaint Resolution – Maintain a specially trained group of employees to handle consumer calls alleging that an unauthorized preferred carrier change has occurred. Upon receiving such calls, Sprint will transfer them to this specially trained group. These subject matter experts will research the customer’s account during the customer’s call whenever feasible, and when not feasible, will arrange to call the customer back. Where LOAs or TPVs are not found within 30 days of receipt of the complaint, all charges billed to the account during the first thirty days after the unauthorized change will be absolved; if the subscriber was billed directly by Sprint and has paid the charges a refund shall be issued, and where the charges are unpaid or the charges were paid but were billed on Sprint’s behalf by the subscriber’s local telephone company, a credit shall be applied to the account. Where LOAs or TPVs are found, credits may be provided to customers based on factors such as the time that has elapsed between the customer’s switch and the registry of his or her complaint, the amount due, and the customer’s payment history. The system used by the subject matter experts will allow Sprint to record relevant information provided by the customer, such as transaction location (e. g., Sprint PCS or other retailer), any allegations of fraud (e. g., forgery or identity theft), and/ or deceptive marketing, without regard to the merits of the allegations made. Sprint shall compile this information received from customer calls on a monthly basis to identify any problems that may require retraining, an Operational Audit at a Sprint PCS retail store, or other proactive measures to ensure future compliance with the Company’s policies; j. Complaint Resolution Process – Send written correspondence to consumers who file complaints with a relevant governmental agency detailing the Company’s findings regarding the complaint and any actions taken by the Company as a result of the account research conducted by Sprint. For such complaints, Sprint will issue credits and refunds in accordance with the Commission’s and any relevant state commission’s slamming rules. Irrespective of how Sprint receives a consumer’s complaint (whether via the Sprint Call Center described above or via a relevant governmental agency), where an LOA or TPV is found and Sprint has credible evidence that the preferred carrier change was verified as a result of fraud, Sprint shall also absolve the subscriber of all charges billed as a result of the unauthorized change and terminate the account at the consumer’s request; refunds shall be issued to the subscriber, if billed directly by Sprint, for any charges paid; and credits shall be issued for unpaid charges billed to the account or for paid charges in the case of subscribers billed on behalf of Sprint by the subscriber’s local telephone company. In cases where Sprint has submitted adverse information to a credit bureau based on an unauthorized preferred carrier change as determined by a relevant governmental agency or fraudulent verification as demonstrated by credible evidence, Sprint shall submit information to the credit bureau to correct the adverse report and notify the affected consumer that it has done so; k. Compliance Review – Compile reports on a monthly basis concerning complaints alleging unauthorized preferred carrier changes and deceptive marketing complaints received by Sprint either through the customer calls described in paragraph (i) or via a 7 Federal Communications Commission FCC 05- 60 6 relevant governmental agency, without regard to the merits of the complaints made, based on wireline preferred carrier changes effectuated as a result of transactions conducted at Sprint PCS retail stores. Sprint will compile the monthly reports by employee, store, market, and area and will furnish the reports to a sales executive at an officer level on a monthly basis. The store managers will discuss each transaction and complaint with the Sales Representative involved in the transaction, including recommending additional training or disciplinary action, where appropriate; l. Compliance Review of PCS Affiliates and RadioShack – Compute on a monthly basis the number of complaints alleging (without regard to the merits of the complaints) that there was an unauthorized preferred carrier change or that the customer was misled in signing up for Residential Wireline Long Distance Services, as a percentage of sales, for each PCS affiliate, each affiliate store, and each RadioShack store. Sprint will target each PCS affiliate, affiliate store, and RadioShack store whose complaint percentage exceeds the average by one standard deviation for review and discussion of corrective action, where appropriate, with appropriate affiliate and/ or RadioShack personnel; and, m. Store Audits – Sprint will conduct an Operational Audit of each Sprint PCS store at least every six months. For any Sprint PCS store whose Complaint Rate, as defined below, exceeds the average for all Sprint PCS stores by more than one standard deviation in any calendar month following its last Operational Audit, that store’s next Operational Audit shall include a review of that store’s adherence to Sprint’s procedures for selling Residential Wireline Long Distance Services. Such audit will include a randomly selected, unannounced observation at the subject store of the store’s selling methods and adherence to Sprint’s sales procedures and principles of business conduct. If the audit discloses any material departure from Sprint’s sales procedures and principles of business conduct, a written report that includes recommendations to the store manager for an action plan for the store to improve its compliance will be prepared within one month of the Operational Audit and will be furnished to the store manager and his or her supervisor. For purposes of this paragraph, “Complaint Rate” means the number of complaints (defined in paragraph (k) above and without regard to the merits of the complaints) received by Sprint associated with sales at the store divided by the number of Residential Wireline Long Distance Services sales by the store. 8. Sprint will provide a written report (“ Compliance Report”) to the Commission six (6) months from the Effective Date describing its compliance with this Consent Decree. The Compliance Report shall describe in detail Sprint’s compliance with this Consent Decree and include information concerning the complaint levels at Retail Stores, use of TPV for Residential Wireline Long Distance Services sales at Retail Stores, material findings of systemic process failures from Operational Audits and any settlements with the states regarding unauthorized preferred carrier changes resulting from sales at Retail Stores. Sprint shall submit Compliance Reports to the Commission twelve (12) months and twenty four (24) months from the Effective Date, and, thereafter, upon written request from the Commission until expiration of this Consent Decree. All Compliance Reports should be submitted to the Commission via e-mail and US mail to the attention of the Chief, Telecommunications Consumers Division, Enforcement Bureau, Federal Communications Commission, Washington, D. C. 20554. 9. Sprint agrees to maintain and make available to the Commission, within 20 business days of receipt of any written request from the Commission (unless the time is extended with the consent of the Commission), business records demonstrating compliance with the terms and provisions of this Consent Decree. 10. Sprint waives any and all rights it may have to seek administrative or judicial reconsideration, 8 Federal Communications Commission FCC 05- 60 7 review, appeal or stay, or to otherwise challenge or contest the validity of this Consent Decree and the Order adopting this Consent Decree, provided the Order adopts the Consent Decree without change, addition, or modification. 11. Sprint’s agreement to enter into this Consent Decree is expressly contingent upon the issuance of an Order by the Commission that is consistent with this Consent Decree, and which adopts the Consent Decree without change, addition, or modification. 12. In the event that this Consent Decree is rendered invalid by any court of competent jurisdiction, it shall become null and void and may not be used in any manner in any legal proceeding. 13. The Parties agree that if any provision of the Consent Decree conflicts with any subsequent rule or order adopted by the Commission, where compliance with the provision would result in a violation, that provision will be superseded by such Commission rule or order. 14. By this Consent Decree, Sprint does not waive or alter its right to assert and seek protection from disclosure of any privileged or otherwise confidential and protected documents and information, or to seek appropriate safeguards of confidentiality for any competitively sensitive or proprietary information. The status of materials prepared for, reviews made and discussions held in the preparation for, and implementation of Sprint’s compliance efforts under this Consent Decree, which would otherwise be privileged or confidential, are not altered by the execution or implementation of the terms of this Consent Decree, and no waiver of such privileges is made by this Consent Decree. 15. If either party (or the United States on behalf of the Commission) brings a judicial action to enforce the terms of the Adopting Order, neither Sprint nor the Commission will contest the validity of the Consent Decree or Adopting Order, and Sprint and the Commission will waive any statutory right to a trial de novo with respect to any matter upon which the Adopting Order is based, and shall consent to a judgment incorporating the terms of this Consent Decree. 16. Sprint agrees that any violation of the Consent Decree or the Adopting Order will constitute a separate violation of a Commission order, entitling the Commission to exercise any rights or remedies attendant to the enforcement of a Commission order. 17. The Parties agree that this Consent Decree shall expire three (3) years after the Effective Date. Unless otherwise specified, all commitments made by Sprint herein shall continue until the expiration of this Consent Decree. 9 Federal Communications Commission FCC 05- 60 8 18. This Consent Decree may be signed in counterparts. For the Commission For Sprint Communications Company L. P. By:_____________________________ By:____________________________________ Marlene H. Dortch Vonya McCann Secretary Senior Vice President, Federal External Affairs _______________________________ ________________________________________ Date Date 10