ÿWPCÆ	  
      $¼    «M!'ç¤`;,ˆ"sj¹Ê}AIÂ˜ƒïÿè[¾‘ý±SÜ²¡G<Ë³‡¾¬ÿðrwF_t!Ó¡¿4äÝT•ýxsP£q™÷üRQV@€ÿ‡Ä¡V†"yXì’ƒ)šè……×^ÍG!„µÍƒÙ-0EèÂdé‚«<e[4ðÁ;H7¯lè&oèz9µœ8¯)$Ì4r_åšoõ™Cu€E Œæå˜+øÜJzPÝôµ‰`|¶Ýe…q øw"zE‘‡Às,ˆ¿GüIÚTÁAL•ŠälJÅªc´¬£§¥lRÅHe]*Ø‡dØ)”XfÀèæÀx89›—£þ±nß_Ñúwœ˜RâƒÌÜÇn˜…HZ>mÔöž;2¶+éS`¾0¡°—ŒD&&5°Ž„1f§¯·&šÿ«‹ã®BÖ^Y­ŸñL3¦™5Üò¶ßâìm°Ùµ„RÙ»ˆïeT>øJRßŠ¯ÖôX¯ùà×â‰ÿ“j	¯ÁÓeM™RˆöIH¥ VúìÅ8©y	xñÃ§W¬^ÝÓ{wø+s”k4ïh¦ÇXnIèëêÀ»F7
”»õŸ•®šð§£'œ’îá!ŸP
{|! ¶„wbhªÓ	÷CßZ¸½Ô-Îòê?…             U   :   à  	%                 0   C   °     ³   ó  0   C   ¦     ’   é     Ž   {        	  n   ­            Æ  0   (   Æ  w      î  4      ò     À    < þ6X  9   ` (  " C o u r i e r   1 0 c p i           X 
   †   Ý
 ƒ   K' ÝÝ    ÝÒ    p° ÒÒ    ° ÒÌÌÌ€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Ú      Ú1Ú
   
 ÚÌ    (                  2 K$ §   §   Ý
 ƒ   ! ÝÝ    Ý 
   ©   Ý
 ƒ   K* ÝÝ    ÝÒ    p° ÒÒ    ° ÒÌ€€€€€€€€€€€€€€€€€€For€The€Record,€Inc.Ì€€€€€€€€€€€€€€€€€€€€Waldorf,€MarylandÌ€€€€€€€€€€€€€€€€€€€€€€(301)870-8025Ì    (                  2 K$ ª   ª   Ý
 ƒ   ! ÝÝ    Ý 
   ˆ   Ý
 ƒ   K' ÝÝ    ÝÒ    p° ÒÒ   t° ÒÌÌÌ€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Ú      Ú300Ú
   
 ÚÌ 
   „   Ý
 ƒ   K* ÝÝ    ÝÒ    p° ÒÒ   t° ÒÌ€€€€€€€€€€€€€€€€€€For€The€Record,€Inc.ÌÌ€€€€€€€€€€€€€€€€€€€€€€(301)870-8025Ì#| x        « < þ6X  9   ` (  " C o u r i e r   1 0 c p i                                                                                             Xôx þ6X   @É “8Õ+ X@    (                    $ ¡   ¡       âœÑ"     tÿ Ô       P A Y - P E R - C A L L   W O R K S H O P   C O N F E R E N C E   ( D A Y   1 :   J U N E   1 9 ,   1 9 9 7 )                                                                                                                                                                                                                                                                                                                                                                                                                   L     T R A N S C R I P T   O F   W O R K S H O P / C O N F E R E N C E        Í
;   
 '           A C O H N    0    A C O H N   
 .      
       
       
       Ý
 ƒ   ! ÝÝ    ÝÒ    p° ÒÑ    ,° ÑÑ   ð ° ÑÖ  €       ÿÿ ÖÖ €       ÿÿ ÖÓ          ÓÒ   t° Ò€€€€€€€€€€€€€€€€€€FEDERAL€TRADE€COMMISSIONÌ€€€€€€€€€€€€€€€€€€€€€€€€€òòI€N€D€E€XÐ   	 l   Ðóó€Ð   	 ü    ÐòòAGENDA€ITEMóó:€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€òòPAGEóó:Ð   	 Œ
°   Ð€ÌBart€Gordon€Remarks€€€€€€€€€€€€€€€€€€€€€€€€€€4ÌWelcome--€Ms.€Harrington€€€€€€€€€€€€€€€€€€€€€9ÌChargebacks€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€41ÌChargebacks€for€International€Audiotext€€€€104ÌImpact€of€Changes€on€Chargebacks€€€€€€€€€€€125ÌBilling€&€Collecting€Issues€€€€€€€€€€€€€€€€148ÌBilling€Entities€€€€€€€€€€€€€€€€€€€€€€€€€€€198ÌSolutions€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€244ÌÐ	   	 ,P   Ð€€€€€€€€€€€€€€€€€€€FEDERAL€TRADE€COMMISSIONÌ€ÌIn€the€Matter€of:€€€€€€€€€€€€€)ÌWorkshop€on€Pay-Per-Call€€€€€€)ÌRulemaking.€€€€€€€€€€€€€€€€€€€)Ì------------------------------)Ì€€€€€€€€€€€€€€€€€€€€€€€€€Thursday,€June€19,€1997Ì€Ì€€€€€€€€€€€€€€€€€€€€€€€€€Room€432Ì€€€€€€€€€€€€€€€€€€€€€€€€€Federal€Trade€CommissionÌ€€€€€€€€€€€€€€€€€€€€€€€€€6th€Street€and€PennsylvaniaÌAve.,€NWÌ€€€€€€€€€€€€€€€€€€€€€€€€€Washington,€D.C.€20580Ì€Ì€€€€€€€€€€The€above-entitled€matter€came€on€forÌconference,€pursuant€to€notice,€at€9:00€a.m.Ì€ÌAPPEARANCES:Ì€ÌòòFROM€THE€FEDERAL€TRADE€COMMISSIONóó:Ð   	 Œ#°&   Ðòò€€€€€€€€EILEEN€HARRINGTONÐ   	 %@(   Ð€€€€€€€€ALLEN€HILEÌ€€€€€€€€MARIANNE€SCHWANKEÌ€€€€€€€€MARK€HERTZENDORFÌ€€€€€€€€ADAM€COHNÌÐ	   	 ì,'2   Ðóó€Ð   	 Ü      ÐòòFROM€THE€INDUSTRYóó:Ð   	 l   Ð€Ìòò€€€€€€€€PETER€J.€BRENNAN,€TPIÐ   	 Œ
°   Ð€€€€€€€€R.€J.€GORDON,€R.€J.€Gordon€&€Co.Ì€€€€€€€€LINDA€A.€GOLDSTEIN,€Hall€DicklerÌ€€€€€€€€J.€ALAN€TAYLOR,€Florida€PSCÌ€€€€€€€€BARBARA€MAJESKI,€SNETÌ€€€€€€€€ALBERT€J.€ANGEL,€ICN€LimitedÌ€€€€€€€€JON€W.€SHAUB,€AT&TÌ€€€€€€€€JAMES€H.€BOLIN,€JR.,€AT&TÌ€€€€€€€€DAVE€GILLIS,€NAAGÌ€€€€€€€€JILL€SANDFORD,€NAAGÌ€€€€€€€€REBECCA€G.€BOWMAN,€NAAGÌ€€€€€€€€SUSAN€GRANT,€National€Consumers€LeagueÌ€€€€€€€€KIM€WILLIAMS,€Southwestern€BellÌ€€€€€€€€WALT€STEIMEL,€JR.,€PilgrimÌ€€€€€€€€JOEL€R.€DICHTER,€Klein€ZelmanÌ€€€€€€€€DON€KLUG,€MCIÌ€€€€€€€€RONALD€S.€GOLDBRENNER,€PMAAÌ€€€€€€€€TODD€LESSER,€JARTEL,€Inc.Ì€€€€€€€€GARRETT€L.€PASSON,€NTS,€Inc.Ì€€€€€€€€PHILLIP€MELLO,€Telecompute€Corp.Ì€€€€€€€€IAN€K.€EISENBERGÌóó€Ð   	 \+€%0   ÐÐ	   	 ì,'2   Ðòò€€€€€€€€€€€€€€€€€€€€P€R€O€C€E€E€D€I€N€G€SÐ   	 Ü      Ð€€€€€€€€€€€€€€€€€€€€-€€€€-€€€€-€€€€-€€€€-Ìóó€€€€€€€€MS.€HARRINGTON:€€Good€morning,€everyone,€andÐ   	 ü    Ðhere€we€are€again.€€I€am€Eileen€Harrington€with€theÌFederal€Trade€Commission's€Bureau€of€Consumer€ProtectionÌstaff.€€I€am€going€to€be€moderating€these€sessions,€andÌas€General€Haig€said,€don't€worry,€I€am€in€completeÌcontrol€here,€and€I€am€going€to€demonstrate€that€byÌmaking€a€switch€on€the€agenda€right€off€the€bat.Ì€€€€€€€€Before€we€do€welcome€announcements€and€coverÌprocess€and€ground€rules€for€the€next€two€days,€we€areÌvery€honored€to€have€with€us€this€morning€CongressmanÌBart€Gordon€of€Tennessee€who€long€has€had€a€veryÌthoughtful€interest€in€issues€concerning€audiotextÌservices,€telecommunications€and€consumer€protection,Ìamong€others.Ì€€€€€€€€Congressman€Gordon€is€on€a€very€tight€scheduleÌthis€morning,€and€we€are€going€to€turn€to€him€for€hisÌremarks.€€He€has€filed€a€comment€and€otherwise€played€byÌall€of€the€rules€that€all€of€the€rest€of€you€have.€€WeÌare€delighted€to€have€his€input€in€this€rulemaking,€andÌI€now€turn€to€the€Honorable€Bart€Gordon€from€the€stateÌof€Tennessee€for€his€comments,€and€then€my€understandingÌis€that€the€Congressman€has€a€hearing€and€will€beÌleaving€right€away.ÌÐ	   	 ì,'2   Ð€€€€€€€€REPRESENTATIVE€GORDON:€€I€have€a€hearing€onÌelectronic€or€Internet€privacy,€which€we€were€justÌtalking€about,€so€I€will€have€to€go€back€to€the€rankingÌmember€on€that€committee,€but€first€let€me€just€--€IÌwant€to€thank€you,€Eileen,€for€the€good€job€you've€doneÌand€the€FTC€in€both€implementing€TDDRA€as€well€as€takingÌthis€next€step€to€try€and€finetune€it€and€for€all€of€theÌfolks€here€at€the€table,€many€of€you€I€have€been€workingÌwith€over€the€years.Ì€€€€€€€€This€is€a€very€complicated€issue€in€a€lot€ofÌways.€€It€reminds€me€what€a€former€math€teacher€of€mineÌtold€me€that€there€were€three€kinds€of€people€when€itÌcomes€to€arithmetic,€those€that€understand€it€and€thoseÌthat€don't,€and€so€I€hope€that€you're€ones€thatÌunderstand€this,€because€I€know€it's€very€complicated,Ìand€I'm€glad€to€join€you.Ì€€€€€€€€I€have€included€some€formal€remarks€that€go€intoÌspecifics€on€some€of€the€questions€that€you€asked,€soÌI'm€not€going€to€spend€a€lot€of€time€on€that,€but€toÌgive€you€a€little€background€on€how€I€became€interestedÌand€how€really€TDDRA€got€developed,€as€a€member€ofÌCongress,€I€have€a€lot€of€open€meetings,€and€I€wentÌthrough€a€period€of€time€where€I€continued€to€hearÌpeople€complain€about€scams€from€900€numbers,€parentsÌwho€would€find€that€a€slumber€party€would€result€in€aÌÐ	   	 ì,'2   Ðlot€of€unknown€bills€being€run€up€on€their€charges,Ìbusiness€individuals€that€would€find€that€maybe€aÌdelivery€boy€would€come€by€and€make€a€variety€of€callsÌor€a€motel€operator€would€find€that€a€lot€ofÌunauthorized€calls€were€made€and€bills€--€were€coming€inÌto€them€that€they€didn't€know€anything€about,€and€it€wasÌsomething€that€the€more€you€would€ask€about€it,€the€moreÌyou€found€it€was€out€there,€and€so€I€tried€to€find€a€wayÌto€what€I€think€is€restore€the€credibility€of€a€veryÌimportant€commodity,€and€that€is€electronic€commerce€andÌ800€numbers€and€900€numbers.Ì€€€€€€€€In€1992,€when€TDDRA€was€first€passed,€theÌteleservice€business€was€less€than€a€$1€billionÌindustry.€€Now€it's€more€than€a€$6€billion€industry,€andÌI€think€that€if€we€maintain€the€credibility€in€theÌservice,€as€well€as€the€potential€for€the€InternetÌcoming€online,€it€is€just€going€to€explode€with€theÌ0-800€numbers€also€coming€online€soon,€and€it's€veryÌimportant,€and€I€think€this€meeting€is€very€important,Ìthat€we€set€those€ground€rules€so€that€this€industry€canÌcontinue€to€move€forward.Ì€€€€€€€€As€a€result€of€TDDRA€--€and€also,€I€don't€--€IÌwant€to€--€Lisa€Fox€is€here.€€Lisa€worked€with€me,Ìbecause€I€know€--€there€is€Lisa€--€was€working€on€myÌstaff€at€the€time,€and€we€didn't€try€to€dictate€throughÌÐ	   	 ì,'2   Ðthese€rules.€€We€just€--€we€tried€to€bring€people€fromÌall€parts€of€the€industry€and€talk€about€it,€and€LisaÌwas€very€helpful.Ì€€€€€€€€Robin€Mahl€is€--€has€taken€up€the€banner€and€isÌworking€with€my€staff€or€is€my€legislative€directorÌworking€on€this€issue€now,€and€she€will€be€here€today,Ìand€I€want€you€to€know€that€if€there€are€--€whatever€mayÌbe€concerns€about€the€original€intent€of€the€law,€pleaseÌcontact€me,€I'll€come€back,€I'll€call€or€send€whateverÌinformation€that€you€might€need,€and€Robin€will€be€hereÌto€help€on€that.Ì€€€€€€€€But€we€found€a€real€difference€at€home,€theÌcomplaints€have€gone€down.€€I€noticed€in€all€theÌcomments€they€said€the€complaints€have€gone€down.€€InÌTennessee,€over€300,000€people€now€are€using€callÌblocking,€and€I€think€--€I€don't€know€whether€it€wasÌAT&T€said€that€--€no,€I'm€sorry,€another€group€said€thatÌsomething€like€a€third€of€their€customers€--Ì€€€€€€€€MS.€WILLIAMS:€€Southwestern€Bell.Ì€€€€€€€€REPRESENTATIVE€GORDON:€€Yeah,€used€900€blocking,Ìwhich€is€really€amazing€to€me€that€you€can€communicateÌthat€information.€€I'm€someone€who€has€learned€that€youÌhave€to€just€say€it€over€and€over€and€over€to€makeÌpeople€know€something,€and€not€only€do€they€know€it,€butÌthey€act€upon€it,€which€I€think€is€very€good€and€againÌÐ	   	 ì,'2   Ðgives€that€additional€credibility€for€the€--€for€theÌindustry.Ì€€€€€€€€Really€the€telephone€now€is€an€instrument€ofÌelectronic€commerce€like€the€POS,€and€we€are€going€toÌsee€more€and€more€I€think€electronic€commerce,€and€IÌthink€as€this€comes€about,€we€have€got€to€recognize€thatÌit's€sort€of€a€two-edged€sword,€that€the€originalÌpurpose€of€TDDRA€was€to€provide€consumer€protections€toÌgive€the€industry€a€credibility€so€that€it€couldÌcontinue.Ì€€€€€€€€I€think€now€we€have€got€to€be€concerned€thatÌwith€the€protection€the€consumers€have€received,€thatÌthey€also€have€a€responsibility.€€If€they€know€what€theyÌare€getting€into€and€buy€a€service,€then€they€need€toÌpay€for€that€service,€and€that's€something€--€one€of€theÌcharges€of€this€committee€is€to€look€at€the€billing€andÌcollection€procedures.€€Chargebacks€I€think€now€amountÌto€40€or€50€percent€of€the€industry,€and€so€I€hope€thatÌthat€will€be€something€that€will€be€looked€into.€€I€haveÌpresented€some€specific€recommendations.Ì€€€€€€€€And€although€the€Internet€is€something€that€whenÌwe€--€when€we€put€TDDRA€together,€we€thought€that€thatÌwas€something€that€would€come€along,€and€we€gave€you€aÌlittle€hook€there,€and€I€think€that€we€all€recognizeÌthat€probably€the€--€it's€like€a€doctor,€do€no€harm.€€WeÌÐ	   	 ì,'2   Ðdon't€want€to€do€any€more€than€necessary,€but€I€thinkÌthere€is€going€to€be€some€efforts€to€have€some€groundÌrules€in€the€Internet,€and€I€think€what€we€have€learnedÌwith€the€900€industry€can€be€taken€over€there.Ì€€€€€€€€Serving€on€both€the€Commerce€Committee€and€theÌScience€Committee,€we€are€going€to€be€dealing€with€theseÌissues,€and€I€am€also€working€with€Howard€Magaziner.€€SoÌI€would€hope€that€outside€of€the€specificÌrecommendations€that€you€have,€that€as€a€group,€you€willÌfeel€that€you€can€come€to€me€and€to€my€office€withÌrecommendations€that€may€be€outside€this€charge,€ofÌthings€that€you€think€we€need€to€be€looking€at€maybe€inÌa€different€way€and€things€that€we€need€to€be€sure€weÌdon't€meddle€with,€but€please€let€me€have€the€benefit€ofÌall€of€your€expertise€and€thoughts€on€that€end.Ì€€€€€€€€So,€with€that€I'll€get€out€of€your€way€and€letÌyou€get€on€with€your€job.€€And€again,€I€thank€you€forÌthe€good€job€you're€doing€and€look€forward€to€continuingÌto€work€with€you.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Congressman€Gordon.Ì€€€€€€€€With€that€very€helpful€and€I€think€focusedÌbeginning,€let€me€offer€some€observations€as€we€beginÌfrom€the€staff€of€the€Federal€Trade€Commission€and€thenÌalso€go€over€with€you€what€the€ground€rules€are€going€toÌbe€for€this€workshop€conference.ÌÐ	   	 ì,'2   Ð€€€€€€€€As€I€look€around€and€say,€well,€here€we€areÌagain,€many€of€you€participated€in€the€originalÌrulemaking€that€interpreted€portions€of€TDDRA.€€I€wasÌthinking€back€on€that€last€night€and€realizing€that€--€IÌguess€that€that€was€four€years€ago€that€we€were€hereÌabout€the€same€time€of€year,€figuring€out€what€theÌground€rules€for€the€industry€ought€to€be€in€regulatoryÌform.Ì€€€€€€€€That€rulemaking€proceeding€was€the€first€timeÌthat€the€Federal€Trade€Commission€had€used€this€kind€ofÌprocess€in€connection€with€regulatory€work;€that€is,€weÌhad€previously,€as€most€agencies€had,€I€think,€stayedÌtrue€to€the€somewhat€dry€and€rigid€process€of€notice€andÌcomment,€comment,€comment,€comment.€€What€we€found€inÌthe€900€number€rulemaking€where€we€first€used€thisÌprocess€was€that,€first€of€all,€we,€the€staff€people€whoÌare€responsible€for€doing€this€work,€had€much€betterÌinformation€upon€which€to€rely€as€a€result€of€theÌdialogue€that€occurred€at€the€rulemaking€workshop.Ì€€€€€€€€Secondly,€we€were€very€impressed€with€theÌefforts€of€the€participants€in€that€workshop€to€reallyÌlisten€to€one€another€and€to€modify€positions€where€thatÌwas€appropriate.€€And€so€third,€we€found€that€when€weÌactually€promulgated€a€rule,€we€had€a€rule€that€justÌabout€everyone€who€had€an€interest€in€the€issue€wasÌÐ	   	 ì,'2   Ðcomfortable€with.€€It€was€almost€but€not€quite€I€wouldÌsay€a€consensus€rule.€€And€so€that€was,€I€think,€a€veryÌpositive€experience,€and€I€hope€that€the€next€two€daysÌwill€be€equally€helpful€and€positive€for€all€of€us€as€weÌtry€together€to€do€the€right€thing.Ì€€€€€€€€Secondly,€I€was€thinking€about€the€rule€itself,Ìand€along€with€Congressman€Gordon,€who€reports€that€heÌhas€received€hardly€any€complaints€from€his€constituentsÌabout€900€number€scams€since€this€rule€took€effect,€weÌat€the€FTC€have€also€seen€a€huge€drop-off€in€complaintsÌabout€--€about€scams€that€are€associated€with€the€900Ìnumber€dialing.Ì€€€€€€€€Unfortunately,€we€have€seen€a€huge€increase€inÌpay-per-call€and€complaints€about€pay-per-call€servicesÌthat€are€delivered€outside€of€the€900€number€dialingÌpattern.€€And€one€of€the€hard€issues€that€we€have€toÌdeal€with€is€whether€and€how€there€might€be€a€way€toÌextent€TDDRA-type€protections€to€consumers€who€availÌthemselves€of€those€services€that€don't€use€the€900Ìnumber€dialing€pattern.€€But€in€terms€of€a€rule€that€hasÌhad€some€positive€effect€in€laying€ground€rules€thatÌlegitimate€players€have€followed€to€the€benefit€of€anÌindustry€and€consumers,€we€I€think€have€been€generallyÌpleased€with€the€results€of€our€rulemaking€work€lastÌtime€around.ÌÐ	   	 ì,'2   Ð€€€€€€€€The€other€thing€that€occurred€to€me€as€I€wasÌthinking€about€this€work€is€that€the€TDDRA€legislationÌand€the€rule€that€followed€were€the€first€efforts€toÌprovide€the€state€attorneys€general,€who€are€our€mostÌimportant€partners€in€the€law€enforcement€field,€withÌaccess€to€the€federal€courts€for€enforcement€proceedingsÌand€to€obtain€relief€for€their€citizens,€and€thatÌlegislative€and€regulatory€model€has€now€been€followedÌin€several€other€important€consumer€protection€areas,Ìtelemarketing€sales,€fair€credit€reporting€and€homeÌequity€protection.Ì€€€€€€€€And€so€really€this€regulatory€effort€that€beganÌwith€the€enactment€of€TDDRA€from€our€perspective€broughtÌabout€a€number€of€firsts.€€First€in€opening€up€theÌprocess€to€one€that€involves€more€dialogue;€first€inÌproviding€shared€legal€authority€to€the€states€to€makeÌaccess€--€to€have€access€to€the€federal€courts;€andÌreally,€I€think,€a€first€in€--€in€my€anecdotalÌrecollection€of€rulemaking€at€the€FTC,€we€weren't€suedÌover€this€rule,€and€we€expect€that€we€won't€be€overÌwhatever€modifications€we€make€either.Ì€€€€€€€€So,€with€those€comments€and€observations,€let€meÌtell€you€a€little€bit€about€how€we€are€going€toÌoperate.€€First€of€all,€I'll€be€sharing€the€moderatingÌduties€with€my€colleague,€Allen€Hile,€who's€an€assistantÌÐ	   	 ì,'2   Ðdirector€in€our€division.€€So,€either€Allen€or€I€will€beÌfacilitating€and€moderating€throughout.Ì€€€€€€€€We€are€joined€by€the€excellent€staff€that€willÌbe€doing€the€actual€work€here,€Carol€Danielson,€AdamÌCohn,€Marianne€Schwanke,€Mark€Hertzendorf.€€ThroughoutÌthe€session,€they€will€be€asking€questions€of€you€andÌtrying€to€get€you€to€talk€to€each€other€and€respond€toÌeach€other.Ì€€€€€€€€As€is€always€the€case€in€these€session,€a€veryÌhigh€premium€will€be€placed€on€participation€that€isÌresponsive€and€a€very€low€value€will€be€placed€onÌparticipation€that's€simply€restates,€positions€taken€inÌwritten€comments€or€otherwise€is€not€really€responsiveÌto€what€is€being€discussed€at€the€table.Ì€€€€€€€€The€process€for€being€recognized€is€simply€justÌput€your€name€tent€up,€and€I€will€be€calling€on€peopleÌin€some€order€but€will€be€somewhat€arbitrary€aboutÌthat.€€I'll€be€keeping€track€of€who€wants€to€participateÌbut€also€recognizing€people€sometimes€out€of€turn€if€theÌinterest€that€they€represent€seems€particularly€wellÌsuited€to€respond€to€something€that€has€just€been€said.ÌHopefully€everyone€will€feel€that€they€have€had€an€ampleÌopportunity€to€participate€in€the€discussion.Ì€€€€€€€€I€will€also€be€recognizing€staff€people€fromÌthe€Commission€so€that€they€can€follow€up€with€questionsÌÐ	   	 ì,'2   Ðin€close€proximity€to€the€comments€that€have€been€madeÌby€the€person€to€whom€they€wish€to€address€theÌquestions.€€So,€please€be€patient.€€We€will€get€to€you,Ìbut€we€will€also€be€trying€to€facilitate€dialogue€hereÌrather€than€just€a€series€of€monologue€presentations.Ì€€€€€€€€We€will€stay€on€schedule€strictly.€€We€need€youÌto€do€something€for€us€right€off€the€bat€here,€and€thatÌis€to€identify€yourself€by€name€and€affiliation.€€WeÌhave€a€stenographer€who€is€a€making€record€of€this.ÌThis€is€part€of€a€rulemaking€proceeding,€so€we€areÌmaking€a€record,€and€it's€very€important€that€we€knowÌwho€you€are€and€who€you€represent€when€you€speak,€and€soÌwe€would€like€you,€please,€to€do€this€once€at€theÌbeginning,€and€then€I€will€try€to€call€on€you€by€name,Ìbut€if€I€don't,€please€state€your€name€every€time€youÌspeak€so€that€our€reporter€can€keep€a€record€of€who€isÌsaying€what,€and€we€may€interrupt€you€if€the€reporter€isÌhaving€difficulty€identifying€you.Ì€€€€€€€€The€other€sort€of€housekeeping€point€is€that€weÌknow€that€some€of€you€represent€organizations€that€haveÌmore€than€one€representative€here€and€that€you€will€beÌswitching€off.€€We€need€you,€before€you€switch€off€atÌthe€break€--€I'm€assuming€that€you€are€going€to€beÌswitching€at€break€times,€and€so€at€the€break,€pleaseÌsee€our€reporter€and€tell€her€that€you€will€be€replacingÌÐ	   	 ì,'2   Ðso€and€so€on€behalf€of€such€and€such€group€at€the€tableÌfor€the€next€session.Ì€€€€€€€€Is€that€all€agreeable€to€everyone?Ì€€€€€€€€All€right€--€oh,€and€please€wear€your€name€tagsÌall€the€time,€all€the€time.€€Thank€you.Ì€€€€€€€€There€are€rest€rooms€on€this€floor€almostÌdirectly€outside€of€the€room.€€There€is€a€telephone€inÌthe€anteroom€area,€although€I€would€remind€you€that€theÌdoors€are€open€into€that€area.€€So,€if€you€need€to€useÌthe€telephone,€if€you€could€speak€softly,€that€would€beÌhelpful.Ì€€€€€€€€Does€anyone€have€any€questions€before€we€begin?ÌAny€questions€about€the€process?Ì€€€€€€€€Okay,€I€would€like€first€of€all€for€theÌreporter's€benefit€to€ask€each€person€to€just€say€yourÌname€and€say€what€organization€you're€representing€andÌdo€it€slowly.€€So,€I'm€going€to€begin.Ì€€€€€€€€I€am€Eileen€Harrington€from€the€Bureau€ofÌConsumer€Protection€of€the€Federal€Trade€Commission.Ì€€€€€€€€MR.€HILE:€€Allen€Hile€from€the€Bureau€ofÌConsumer€Protection€with€the€Federal€Trade€Commission.Ì€€€€€€€€MR.€COHN:€€Adam€Cohn€of€the€Bureau€of€ConsumerÌProtection€of€the€Federal€Trade€Commission.Ì€€€€€€€€MS.€DANIELSON:€€Carol€Danielson,€Bureau€ofÌConsumer€Protection,€Federal€Trade€Commission.ÌÐ	   	 ì,'2   Ð€€€€€€€€MR.€BRENNAN:€€Peter€Brennan,€Tele-PublishingÌIncorporated.Ì€€€€€€€€MR.€R.€GORDON:€€Richard€Gordon,€chairman€of€theÌTeleservices€Industry€Association.Ì€€€€€€€€MS.€GOLDSTEIN:€€Linda€Goldstein,€PromotionalÌMarketing€Association€of€America.Ì€€€€€€€€MR.€TAYLOR:€€Alan€Taylor€with€the€Florida€publicÌservice€commission.Ì€€€€€€€€MR.€ANGEL:€€Albert€Angel,€ICN€Limited€on€behalfÌof€ISA,€Interactive€Services€Association.Ì€€€€€€€€MR.€SHAUB:€€Jon€Shaub,€AT&T,€Multiquest€900ÌServices.Ì€€€€€€€€MR.€GILLIS:€€Dave€Gillis,€I'm€with€the€WisconsinÌattorney€general's€Office€and€with€me€is€Jill€Sandford,Ìwho€is€with€the€New€York€attorney€general's€Office.Ì€€€€€€€€MS.€GRANT:€€Susan€Grant,€National€ConsumersÌLeague.Ì€€€€€€€€MS.€WILLIAMS:€€Kim€Williams,€Southwestern€BellÌTelephone€Company,€representing€Southwestern€Bell€andÌPacific€Bell.Ì€€€€€€€€MR.€STEIMEL:€€Walt€Steimel,€Junior,€Hunton€&ÌWilliams,€representing€Pilgrim€Telephone,€Inc.Ì€€€€€€€€MR.€DICHTER:€€Joel€Dichter€on€behalf€of€theÌInternational€Telemedia€Association.€€With€me€are€RoyÌElliott,€Executive€Director€and€Toby€Padgham,€AssociateÌÐ	   	 ì,'2   ÐDirector€of€the€organization.Ì€€€€€€€€MR.€KLUG:€€Don€Klug,€MCI.Ì€€€€€€€€MR.€HERTZENDORF:€€Mark€Hertzendorf,€FederalÌTrade€Commission€from€the€Bureau€Of€economics.Ì€€€€€€€€MS.€SCHWANKE:€€Marianne€Schwanke,€Bureau€ofÌConsumer€Protection,€Federal€Trade€Commission.Ì€€€€€€€€MS.€HARRINGTON:€€Good.Ì€€€€€€€€Now€I€would€like€to€take€as€brief€a€period€ofÌtime€as€we€can€but€certainly€no€more€than€the€next€35Ìminutes€for€each€of€you€to€introduce€yourselves€and€toÌmake€a€very€brief€statement€of€what€your€interest€is€inÌthis€proceeding,€and€we€would€like€to€hear€from€you.ÌOne€of€the€requirements,€as€you€know,€for€all€of€you€toÌbe€seated€at€this€table€is€that€you€not€only€file€aÌcomment€but€read€the€comments€of€others.€€So,€you€shouldÌassume€that€we€all€know€everything€that€you€have€writtenÌin€your€comments,€and€we€don't€want€you€to€rehash€that.Ì€€€€€€€€What€we€want€to€know,€I€think,€is€what€you€careÌabout€most,€what€your€group€is€most€concerned€about.€€WeÌare€interested€--€we€are€all€stakeholders.€€We€areÌinterested€in€appreciating€the€most€important€concernsÌof€each€of€you€stakeholders,€and€I€am€going€to€justÌrandomly€begin€here€with€Susan,€if€that's€all€right€withÌyou.Ì€€€€€€€€MS.€GRANT:€€Sure.€€The€National€ConsumersÌÐ	   	 ì,'2   ÐLeague€--Ì€€€€€€€€MS.€HARRINGTON:€€Could€you€say€your€name€again?Ì€€€€€€€€MS.€GRANT:€€Oh,€Susan€Grant,€vice€president€ofÌpublic€policy€at€the€National€Consumers€League€andÌdirector€of€the€National€Fraud€Information€Center.Ì€€€€€€€€The€National€Consumers€League€is€the€oldestÌnonprofit€consumer€organization€in€the€U.S.,€and€we€haveÌbeen€involved€for€some€time€in€protecting€consumers'Ìinterests€with€regard€to€telephone€services.€€We€operateÌthe€National€Fraud€Information€Center,€which€is€aÌtelephone€hotline€and€a€web€site€through€which€consumersÌcan€get€advice€about€telephone,€online€and€InternetÌsolicitations€and€report€possible€fraud,€and€we€routeÌconsumers'€reports€of€possible€fraud€to€law€enforcementÌagencies€to€alert€them€to€them.Ì€€€€€€€€I€have€read€everybody's€comments,€and€I€haveÌdone€a€short€list€of€what€I€think€are€major€concerns.ÌThe€first€is€that€presubscription€agreements€for€callingÌ800€numbers€should€be€confirmed€in€writing.€€DocumentingÌthe€agreement€would€reduce€fraud€and€disputed€charges.Ì€€€€€€€€Second,€consumers€need€as€much€information€andÌprotection€in€pay-per-call€services€using€internationalÌphone€numbers€as€in€900€number€calls.€€Frankly,€if€weÌcan't€find€a€good€solution€at€this€time,€perhaps€the€useÌof€international€numbers€for€these€purposes€should€beÌÐ	   	 ì,'2   Ðbanned.Ì€€€€€€€€Third,€pay-per-call€promotions€on€the€InternetÌmust€clearly€state€all€terms€and€conditions,€and€I€feelÌthat€this€is€a€very€complex€issue€but€one€that€theÌindustry€can€work€with€us€all€on€in€developingÌguidelines€to€ensure€adequate€disclosure€for€consumers.Ì€€€€€€€€And€finally,€consumers€should€not€be€intimidatedÌfrom€disputing€pay-per-call€charges€or€unfairly€barredÌfrom€access€to€telecommunications€services.€€InformationÌproviders€have€chosen€this€particular€medium€to€sellÌtheir€services€and€collect€payment.€€The€burden€shouldÌbe€on€them€to€show€that€consumers€made€the€calls€andÌunderstood€the€terms.€€If€they€cannot€do€that,€consumersÌshould€be€given€the€benefit€of€the€doubt€for€disputedÌcharges.Ì€€€€€€€€Thank€you.Ì€€€€€€€€MS.€HARRINGTON:€€Well,€one€of€the€reasons€that€IÌcalled€on€Susan€first€is€that€I€knew€she€would€be€theÌmodel€pupil.Ì€€€€€€€€MS.€GRANT:€€Thank€you.Ì€€€€€€€€MS.€HARRINGTON:€€And€clearly€and€succinctlyÌstating€interests.€€That€was€perfect,€so€all€of€youÌshould€do€it€just€like€Susan.Ì€€€€€€€€Now,€I€am€going€to€randomly€call€on€someoneÌarbitrarily,€who€might€have€a€slightly€differentÌÐ	   	 ì,'2   Ðposition.Ì€€€€€€€€MR.€ANGEL:€€I€am€here€representing€theÌInteractive€Services€Association,€and€the€ISA€has€beenÌan€active€participant€in€virtually€all€of€the€issuesÌthat€concern€telephone€information€services€and€theÌemerging€area€of€online€and€Internet€services.€€We€haveÌseveral€interests.Ì€€€€€€€€We€would€like€to€essentially€refine€the€rulesÌthat€were€adopted€in€order€to€institute€some€reformsÌthat€will€make€possible€more€effective€and€efficient€useÌof€these€services.€€The€types€of€reforms€that€we'reÌlooking€for€are€modification€of€the€advisory€that€isÌcontained€in€the€bill€insert.Ì€€€€€€€€We're€looking€to€finetune€and€enforce€theÌstandards€and€operating€procedures€that€are€used€byÌbilling€agents€in€order€to€deal€with€dispute€resolution,Ìin€order€to€have€a€well-oiled€machine€that€promptlyÌadministers€justice€and€gives€timely€notice€to€allÌparties€involved.Ì€€€€€€€€We€are€also€participating€to€ensure€that€theÌinvestment€that€we€have€made€in€this€industry€is€notÌdiluted€by€rules€that€are€not€in€the€public€interest.ÌSo,€we€are€really€participating€from€a€prophylacticÌsense€to€keep€things€as€good€as€they€can€possibly€be.ÌAnd€at€the€same€time,€we're€trying€to€encourageÌÐ	   	 ì,'2   Ðinnovation€in€our€industry,€invite€other€parties€thatÌmight€use€different€dialing€patterns€into€the€industryÌbut€to€play€by€the€same€rules€that€the€rest€of€theÌindustry€is€playing€by.Ì€€€€€€€€That's€it.Ì€€€€€€€€MS.€HARRINGTON:€€Excellent.€€Thank€you,€Albe.Ì€€€€€€€€Let's€turn€to€a€different€perspective€yet€againÌand€here€from€the€Florida€Public€Service€Commission.Ì€€€€€€€€Alan€Taylor,€would€you€tell€us€what€yourÌinterest€is?Ì€€€€€€€€MR.€TAYLOR:€€Yes,€thank€you.Ì€€€€€€€€I'm€here€because€in€my€opinion€consumerÌsafeguards€that€currently€exist€are€not€effective.€€TheÌdialing€blocks€that€are€allowed€in€the€current€rules€doÌnot€stop€consumers€from€being€billed€for€informationÌservices.Ì€€€€€€€€I€think€that€what€I€would€hope€would€happen€hereÌis€if€calls€are€going€to€be€--€if€the€definition€is€notÌamended€to€include€these€other€access€codes,€then€weÌneed€to€send€a€clear€message€that€the€responsibility€isÌon€the€information€provider€to€obtain€--€to€obtainÌauthorization€for€any€calls€that€originate€to€any€otherÌservice€access€code.Ì€€€€€€€€I€would€like€to€make€sure€that€the€rules€thatÌare€adopted€allow€for€a€billing€block€option€should€theÌÐ	   	 ì,'2   ÐFederal€Communications€Commission€adopt€this€method€ofÌgiving€consumers€additional€safeguards,€and€I€see€thatÌas€allowing€consumers€who€have€900€blocking€--€I€seeÌthis€as€giving€them€the€tools€to€block€billing€for€otherÌservice€access€codes€if€they€so€choose€on€an€affirmativeÌbasis.€€I'd€like€to€make€sure€the€definition€isÌbroadened€or€that€all€calls€are€restricted€to€the€900Ìservice€access€code.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Alan.Ì€€€€€€€€While€we're€hearing€about€calls€outside€of€theÌ900€dialing€pattern,€let's€turn€to€Joel€Dichter,€whoÌrepresents€some€of€the€interests€that€are€using€non-900Ìdialing€patterns,€and€hear€what€your€group's€interestsÌare.Ì€€€€€€€€MR.€DICHTER:€€Thank€you,€Eileen.Ì€€€€€€€€I€represent€the€International€TelemediaÌAssociation,€which€consists€of€service€bureaus,€carriersÌand€providers€of€international€audiotext€servicesÌthrough€the€various€other€dialing€patterns€like€011€andÌ809,€et€cetera,€and€we€are€aware€--€the€industry€isÌaware€of€the€concerns€that€have€been€raised€by€theÌgroups€around€this€table,€including€Susan€and€Mr.€TaylorÌfrom€Florida,€and€we€are€here€because€we€want€to€addressÌthem.€€We€have€tried€to€come€out€with€a€code,€set€someÌstandards€in€the€industry.ÌÐ	   	 ì,'2   Ð€€€€€€€€We€want€your€input.€€I€am€sure€with€Susan€we€canÌget€together€and€find€solutions€to€these€areas€and€inÌsuch€a€way€that€the€industry€can€continue€to€grow€on€aÌglobal€scale€and€protect€consumers€at€the€same€time.Ì€€€€€€€€MS.€HARRINGTON:€€Thanks,€Joel.Ì€€€€€€€€Well,€let's€hear€from€yet€another€perspective,Ìthat€of€the€LEC.Ì€€€€€€€€Kim,€do€you€want€to€talk€to€us€aboutÌSouthwestern€Bell's€interests?Ì€€€€€€€€MS.€WILLIAMS:€€Yes,€Kim€Williams.Ì€€€€€€€€From€my€perspective,€I€think€Southwestern€BellÌbelieves€that€the€900€rules€were€effective€in€cleaningÌup€900,€and€we€applaud€those€efforts;€however,€we€thinkÌthat€everybody€jumped€to€other€dialing€codes€as€soon€asÌthose€rules€went€in,€and€that's€where€our€concern€liesÌnow,€is€that€there€is€always€a€way€around€whateverÌprotections€are€afforded€consumers.Ì€€€€€€€€The€complaints€we€see€today€about€900€have€justÌabout€disappeared.€€The€only€ones€that€do€seem€to€comeÌin€are€those€where€900€calls€were€never€made€but€billingÌwas€submitted€for€900€calls.€€So,€monthly€fees€andÌthings€similar€to€that€are€being€submitted€under€900Ìnumber€dialing€patterns€when€no€calls€were€ever€made.Ì€€€€€€€€We're€concerned€about€those€things€coming€in€onÌour€bill.€€We€don't€think€the€LEC€is€the€place€to€stopÌÐ	   	 ì,'2   Ðthat,€because€we€can't€tell€whether€a€call€was€a€goodÌcall€or€a€bad€call€when€it€comes€in€to€us€for€billing.ÌWe€can€only€trust€that€our€billing€customers€areÌsubmitting€to€us€legitimate€billing.Ì€€€€€€€€In€the€same€respect,€international€causes€theÌsame€problem.€€A€call€to€another€country€is€a€call€toÌanother€country€when€it's€submitted€to€us€for€billing.ÌWe€can't€tell€if€it€is€similar€to€a€pay-per-call€serviceÌor€if€it's€truly€an€international€call,€and€we€thinkÌthat€issue€needs€to€be€addressed€so€that€consumers€canÌbe€protected.Ì€€€€€€€€The€same€rules€that€have€applied€to€the€900Ìpay-per-call€services€we€think€need€to€be€applied€to€allÌpay-per-call€audiotext€services€to€protect€consumers,Ìand€I€don't€think€the€LEC€is€the€place€to€stop.ÌStopping€the€billing€from€the€LEC€doesn't€stop€theÌcustomer€from€being€billed.€€There€are€alternative€waysÌto€bill€these€services.Ì€€€€€€€€The€LEC€is€not€the€only€option€for€billing,€soÌhow€do€you€stop€a€customer€from€being€billed€forÌsomething?€€You€really€need€to€stop€the€call€from€beingÌmade€or€stop€the€service€from€being€provided€in€a€mannerÌthat€is€not€on€the€up€and€up.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Kim.Ì€€€€€€€€All€right,€a€different€perspective€from€RichardÌÐ	   	 ì,'2   ÐGordon.Ì€€€€€€€€MR.€R.€GORDON:€€I'm€Richard€Gordon,€chairman€ofÌthe€Teleservices€Industry€Association,€and€our€purposeÌhere€today€and€what€we're€trying€to€do,€I€think,€is€inÌconcert€with€everyone€at€the€table€in€that€while€thisÌmay€be€officially€known€as€the€Federal€Trade€Commission,Ìwe€on€the€TSIA€front€believe€that€it's€really€known€asÌthe€"Fair€Trade€Commission."Ì€€€€€€€€One€of€the€things€that's€happened€as€a€result€ofÌthe€pendulum€--€and€when€I€speak€of€the€pendulum,€what€IÌmean€is€back€in€the€late€eighties€and€early€nineties,Ìthere€were€a€lot€of€--€there€was€a€lot€of€confusion€andÌthere€were€a€lot€of€consumer€abuses€where€some€unsultryÌcharacters€did€take€advantage€of€people€because€theyÌdidn't€understand€--€the€consumer€didn't€understand€theÌtechnology.€€TDDRA€came€along,€and€it€set€a€standard,Ìbut€it€didn't€do€the€job€completely.Ì€€€€€€€€As€an€example,€the€regulations€say€that€theÌconsumer€has€a€right€to€charge€back€a€transaction€withinÌ60€days;€however,€there€is€no€enforcement€of€that.ÌThere€have€been€multi-million€dollar€businessesÌdestroyed€in€the€mid-nineties€when€chargebacks€came€backÌthat€were€a€year,€year€and€a€half€and€two€years€old.Ì€€€€€€€€I€challenge€anyone€at€the€table,€including€theÌvarious€state€attorney€generals,€to€stay€in€business€ifÌÐ	   	 ì,'2   Ða€year€after€you've€collected€your€taxes,€suddenly€halfÌof€them€disappear€in€the€form€of€some€form€ofÌchargeback.€€I€think€Congressman€Gordon€has€become€veryÌsensitive€and€very€aware€to€the€fact€that€what'sÌhappened€here€is€chargebacks€have€become€so€easy€that€itÌis€actually€a€situation€where€the€consumers€are€nowÌtaking€advantage€of€the€industry.€€I€don't€know€of€anyÌindustry€in€the€world€that€can€support€a€50€percentÌchargeback€rate€or€a€50€percent€refund€rate.Ì€€€€€€€€Secondarily,€we€are€working€with€hindsight.€€TheÌwork€that€was€done€here€in€1992€and€1993€certainly€wasÌresponsive€to€and€a€reaction€to€what€was€happening.€€TheÌTSIA€didn't€exist€at€that€point€in€time.€€The€TSIA€wasÌformed€a€year€and€a€half€ago€at€the€request€of€15Ìindustry€leaders€because€we€felt€it€was€important€as€anÌindustry€to€self-regulate€and€to€self-police.Ì€€€€€€€€Today,€we€represent€over€a€thousand€differentÌcompanies€in€the€industry,€a€fact€that€I€think€isÌimportant€that€everyone€know€about,€is€the€TSIA€sendsÌout€on€average€a€letter€a€day€to€people€in€the€industryÌthat€the€TSIA€staff€find€are€in€some€way€violating€theÌcode€of€ethics,€a€voluntary€code€of€ethics.€€I€don'tÌthink€there€is€any€funding€in€any€government€agency€thatÌwould€support€the€level€of€research,€self-police€andÌself-enforcement€that€is€happening€as€the€result€of€theÌÐ	   	 ì,'2   ÐTSIA's€efforts.€€And€part€of€our€mission€here€today€isÌto€communicate€to€all€of€you€exactly€what€we€as€a€tradeÌassociation€are€doing.Ì€€€€€€€€When€it€comes€to€enforcement,€there€is€nothingÌbetter€as€a€method€of€enforcement€than€to€stop€theÌmoney.€€If€people€are€promoting€something€and€they€can'tÌget€paid€for€their€promotion,€the€promotion€will€stop.ÌAgain,€on€a€voluntary€basis,€there€are€many,€many,€manyÌof€our€representatives€here€today€that€will€be€able€toÌtestify€about€the€fact€that€as€soon€as€a€violation€isÌfound,€the€money€is€stopped€on€a€voluntary€basis.€€TheÌservice€bureaus€and€the€international€players€freeze€theÌaccounts€of€the€companies€that€are,€in€fact,€violating.Ì€€€€€€€€I€don't€think€anyone€today€would€be€able€to€findÌin€any€of€the€publications€the€use€of€the€word€"free"Ìbecause€the€industry€has€banded€together€in€order€toÌmake€sure€that€consumers€recognize€that€these€are€notÌfree€services.€€The€use€of€the€word€"free"€has€beenÌeliminated€from€99€percent€of€all€the€advertising.€€InÌfact,€the€publishers€call€and€talk€to€each€otherÌfrequently€about€this.Ì€€€€€€€€The€problem€is€that€while€we€have€eliminated€theÌword€"free"€from€the€advertising,€because€the€wording€onÌthe€consumer€disclosure€notice€is€not€uniform,€is€notÌprecise,€and€is€not€concise,€the€consumer€reads€thatÌÐ	   	 ì,'2   Ðnotice€of€their€rights€and€says,€Oh,€this€is€free.Ì€€€€€€€€We€need€to€bring€the€pendulum€back€into€theÌmiddle€where€the€consumer€and€the€provider€have€adequateÌbalance,€and€it's€our€effort€here€and€it's€our€intentÌhere€to€try€to€educate€and€to€learn€so€that€we€will€beÌable€to€work€with€the€Commission€and€truly€have€a€FairÌTrade€Commission.Ì€€€€€€€€Thank€you.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Richard.Ì€€€€€€€€Let's€hear€from€Don€Klug.Ì€€€€€€€€MR.€KLUG:€€Don€Klug,€senior€manager€for€900Ìservices€at€MCI.€€Thank€you,€Eileen.Ì€€€€€€€€MCI's€interests€in€this€proceeding€are€to€reviewÌand€modify€TDDRA€as€appropriate€to€ensure€that€theÌpay-per-call€industry€can€continue€to€grow€at€a€healthyÌrate.Ì€€€€€€€€Kim€Williams€mentioned€that€consumer€complaintsÌon€900€are€almost€nil.€€MCI€in€1991€had€about€20,000Ìconsumer€complaints€on€900€calls.€€In€1996,€we€had€200.ÌThat's€under€1€percent.€€That's€quite€a€drop€in€fiveÌyears,€and€I€think€that's€much€to€the€credit€of€the€FTCÌand€the€industry€in€terms€of€recognizing€abuse€in€theÌindustry€and€implementing€legislation€to€change€that.Ì€€€€€€€€Representative€Gordon€also€said€it's€a€two-edgedÌsword.€€We€need€to€be€concerned€about€consumerÌÐ	   	 ì,'2   Ðprotection,€but€we€also€need€to€recognize€consumerÌresponsibility.€€As€Richard€Gordon€pointed€out,€theÌpendulum€as,€indeed,€swung.Ì€€€€€€€€And€I€think€another€thing€to€keep€in€mind€inÌthese€proceedings€is€not€only€has€the€industry€changedÌin€the€five€years,€but€I€think€some€of€the€applicationsÌhave€changed,€as€well.€€Last€year,€MCI€co-sponsored€aÌfund-raising€900€application€with€the€Hearst€publicationÌLe€Clair€and€were€able€to€raise€over€$50,000€for€breastÌcancer€research.€€So,€I€think€people€are€findingÌinnovative€ways€to€use€the€technology€for€otherÌpurposes.Ì€€€€€€€€MCI€has€a€900-77€--€733€prefix€dedicated€toÌbusiness-to-business€applications€and€AT&T€has€anÌ800-955.€€So,€for€those€reasons€I€think€the€industry€hasÌmuch€changed.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Don.Ì€€€€€€€€Let's€hear€about€other€uses€and€interests€fromÌLinda€Goldstein.Ì€€€€€€€€MS.€GOLDSTEIN:€€Thank€you,€Eileen.Ì€€€€€€€€The€PMAA€represents€many€of€the€Fortune€500Ìcompanies€in€this€country€in€connection€with€theirÌvarious€advertising,€promotion€and€marketingÌactivities.€€So,€our€primary€concern€really€relates€toÌthe€aspects€of€the€rule€as€they€might€impact€upon€theÌÐ	   	 ì,'2   Ðuse€of€this€medium€by€our€members€and€the€manner€inÌwhich€the€programs€that€our€members€might€design€wouldÌbe€advertised€and€promoted€to€the€public.Ì€€€€€€€€We€basically€have€three€primary€interests€--€orÌI€should€say€four€primary€interests€in€this€proceeding.ÌOne€is€that€we€do€believe€that€the€rule€has€been€highlyÌeffective€in€eradicating€many€of€the€abuses€thatÌprompted€the€implementation€of€the€rule,€and€we€have€aÌstrong€interest€in€seeing€that€for€the€most€part€theÌrule€is€maintained€as€status€quo.€€In€that€regard,€weÌwould€be€sorry€to€see€much€additional€regulation€orÌadditional€burden€imposed,€particularly€in€the€areas€ofÌadvertising€or€promotion€or€any€additional€regulationsÌrelating€to€sweepstakes.Ì€€€€€€€€I€think€that€our€experience€with€sweepstakesÌwould€parallel€the€experience€that€Don€Klug€mentioned€inÌthat€the€incidence€of€complaints€in€that€area€hasÌcertainly€dropped,€the€number€of€applications€haveÌdropped,€and€the€elimination€of€many€of€the€abuses€hasÌnow€opened€the€way€for€many€of€our€members€who€were€notÌas€prone€to€utilize€900€as€a€medium€to€begin€to€use€itÌin€increasing€numbers€today.Ì€€€€€€€€I€would€also€point€out€that€the€telephone,€whileÌthere€has€been€obviously€much€expansion€in€the€use€ofÌonline,€the€telephone€remains€an€attractive€medium€forÌÐ	   	 ì,'2   Ðour€members,€because€its€reach€still€exceeds€that€of€theÌcomputer.€€So,€to€the€extent€that€it€allows€our€membersÌto€conduct€interactive€types€of€promotions€and€programsÌwith€its€consumers€as€a€way€of€building€brand€loyalty,Ìit€remains€an€important€issue€to€our€members.Ì€€€€€€€€In€terms€of€the€substantive€areas€of€the€rule€--Ìand€in€this€rule€review,€there€are€really€threeÌprincipal€areas€that€we€have€an€interest€in.€€We€supportÌthe€ISA's€proposals€in€terms€of€reform€to€the€billingÌnotice€and€a€review€of€the€LEC€billing€and€collectionÌprocedures.€€To€the€extent€that€we€can€--€we€also€haveÌfound€that€the€high€chargeback€rate€continues€to€act€asÌa€disincentive€to€certain€of€our€members€to€embrace€900Ìnumber€as€a€medium,€and€to€the€extent€that€someÌreduction€of€the€chargeback€rate€can€be€accomplished,€weÌbelieve€that€the€integrity€of€the€medium€and€itsÌattraction€to€our€members€will€be€further€restored.Ì€€€€€€€€The€second€area€in€which€we€have€a€concernÌrelates€to€the€offering€of€free€periods€of€time€or€whatÌwe€refer€to€as€some€sort€of€a€premium€or€samplingÌprogram€related€to€interactive€services.€€We€believeÌthat€there€is€presently€an€ambiguity€in€the€rules,€thatÌthat€ambiguity€should€be€corrected€to€allow€providers€ofÌaudiotext€services€to€allow€consumers€to€sample€or€tryÌthe€service€much€the€same€as€they€are€allowed€to€try€andÌÐ	   	 ì,'2   Ðsample€other€forms€of€product€or€service€offered€by€ourÌmembers€without€the€additional€restrictions€that€theÌadvisory€opinion€issued€last€spring€might€suggest.Ì€€€€€€€€And€thirdly,€we€have€a€very€strong€interest€inÌwhatever€position€the€Commission€may€take€vis-a-visÌregulation€of€online€services.€€And€that€is€not€such€--Ìcertainly€the€PMAA€does€not€want€to€see€the€online€arenaÌbecome€fraught€with€any€of€the€types€of€abuse€thatÌplagued€this€industry€in€1992,€but€our€concern€really€isÌthat€any€advertising€types€of€restrictions€orÌregulations€or€type€size€or€placement€requirements€thatÌmight€be€imposed€in€the€context€of€this€proceeding€wouldÌhave€precedential€impact€beyond€the€confines€ofÌpay-per-call,€and€we€feel€that€the€whole€issue€of€onlineÌadvertising€and€promotion€is€an€area€that€really€shouldÌbe€looked€at,€if€at€all,€in€the€context€of€a€separateÌproceeding€in€which€the€aspects€unique€to€that€medium,Ìthe€specific€technological€aspects€and€the€technologicalÌdifferences€that€are€unique€to€that€medium€can€really€beÌexplored.€€So,€we€would€hope€that€the€Commission€wouldÌact€with€caution€in€that€regard.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Linda.Ì€€€€€€€€Peter,€let's€hear€from€you.Ì€€€€€€€€MR.€BRENNAN:€€Thank€you.€€I'm€Peter€Brennan€fromÌTele-Publishing€in€Boston,€Massachusetts.ÌÐ	   	 ì,'2   Ð€€€€€€€€I've€participated€in€these€hearings,€in€theÌtestimony€before€some€of€the€Congressional€and€SenateÌcommittees€that€led€to€TDDRA€initially,€so€I€was€part€ofÌthe€alumni,€I€suppose.€€So,€welcome€back.€€I€have€aÌlittle€bit€less€hair€than€most€of€us€and€more€gray,€butÌhere€I€am.Ì€€€€€€€€Tele-Publishing,€our€company,€is€the€world'sÌlargest€supplier€of€voice€personals.€€I€won't€embarrassÌany€of€you€by€asking€if€you€have€tried€them,€but€if€youÌhave€tried€a€voice€personal€on€the€television,€radio€orÌInternet,€this€is€a€mainstream€product.€€Ninety-six€ofÌthe€top€hundred€daily€newspapers€in€the€United€StatesÌuse€them,€and€the€percentage€is€higher€when€you€get€intoÌtop€than€the€top€hundred€newspapers.Ì€€€€€€€€Voice€personals€account€for€about€35€percent€ofÌthe€current€900€number€domestic€business,€and€about€12Ìto€15€percent€of€singles€above€college€age€in€the€UnitedÌStates€use€these€services.€€It€also€is€a€service€thatÌhistorically€has€among€the€lowest€rates€of€chargebacksÌin€the€industry.Ì€€€€€€€€Our€primary€concern€here€is€a€fair€marketplaceÌand€integrity€of€the€billing€and€collection€process€andÌthe€billing€and€collection€system.€€So,€our€interest€isÌin€pursuing€that.Ì€€€€€€€€I€would€also€--€just€two€additional€notes.€€I€amÌÐ	   	 ì,'2   Ðalso€the€chairman€of€the€board€of€directors€of€theÌInteractive€Services€Association,€so€even€though€we€areÌ--€the€ISA€is€ably€represented€to€you€by€Albe€and€byÌWarren€Miller,€I€wanted€to€raise€that€notice,€as€well,Ìand€I€also€wanted,€since€I€have€told€you€who€we€are,€toÌtell€you€who€we€are€not.€€Please,€make€no€mistake,Ìaccept€no€imitations,€Tele-Publishing€is€not€theÌTelephone€Publishing€Corporation€which€was€recently€theÌsubject€of€a€huge€liability€and€played€a€huge€fine€forÌtheir€problems.€€That's€not€us,€that's€them.€€ThankÌyou.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Peter.Ì€€€€€€€€Jon,€what€about€AT&T's€interests?Ì€€€€€€€€MR.€SHAUB:€€Good€morning,€I'm€Jon€Shaub,€productÌmanager€for€AT&T€900€services.€€AT&T's€interest€in€thisÌis€stimulating€healthy,€positive€perceived€growth€in€theÌ900€industry.€€For€reasons€similar€to€MCI,€I'm€sure,€ifÌthe€industry€doesn't€grow,€AT&T€can't€grow€in€this€partÌof€the€business.Ì€€€€€€€€Very€much€in€line€with€that€growth€is€perceptionÌof€people€who€are€not€using€900€services,€businessesÌthat€are€not€using€it,€perceptions€that€may€still€existÌas€to€the€high€chargeback€rates€that€are€agreed€to,€alsoÌperceptions€that€it€is€an€entertainment-only€service€andÌdoes€not€have€valid€business€use.€€So,€we€are€willing€toÌÐ	   	 ì,'2   Ðhelp€with€anything€that€works€to€disspell€thatÌperception.Ì€€€€€€€€MS.€HARRINGTON:€€Okay,€thank€you.Ì€€€€€€€€Walt,€can€we€hear€from€you€and€Pilgrim'sÌperspective?Ì€€€€€€€€MR.€STEIMEL:€€Hi,€I'm€Walt€Steimel€with€Hunton€&ÌWilliams€representing€Pilgrim.Ì€€€€€€€€We€participated€in€this€four€years€ago,€I€was€atÌthe€table€for€Pilgrim€at€that€time,€so€I€thank€you€forÌthe€opportunity€for€letting€us€come€back.Ì€€€€€€€€Our€primary€interests€are,€one,€recognizing€thatÌinformation€services€encompasses€a€number€of€services,Ìenhanced,€pay-per-call,€information,€telemessaging,Ìvoicemail€and€others€and€that€whatever€rules€are€adoptedÌshould€equally€affect€on€a€nondiscriminatory€basis€allÌof€those€services,€and€that's€the€breadth€of€informationÌservices€that€are€out€there.€€It's€really,€really€largeÌand€continuing€to€grow.Ì€€€€€€€€Secondly,€we€want€to€ensure€the€effectiveÌoperation€of€all€the€platforms,€the€dialing€and€billingÌplatforms€permitted€under€statute.€€It€seems€like€to€usÌthat€there€are€at€least€three€platforms€that€wereÌrecognized€and€permitted,€900€access,€800€and€otherÌaccess€with€credit€cards€and€calling€cards,€and€then€800Ìand€other€access€with€written€presubscription.€€So,€youÌÐ	   	 ì,'2   Ðhave€a€written€with€notification€only€once€of€all€theÌconditions;€you€have€a€nonwritten€access,€non-900,Ìnonwritten€with€notification€on€every€single€calm;€andÌthen€900€access.€€We€want€to€make€sure€that€whateverÌrules€come€out€of€this€forum€continue€to€ensure€theÌeffective€operation€of€all€these€platforms.Ì€€€€€€€€We€also€want€to€ensure€the€nondiscriminatoryÌprovision€of€billing€and€transport€for€all€informationÌservices,€regardless€of€the€dialing€platform€and€theÌaccounting.Ì€€€€€€€€Should€I€wait€for€the€police€to€go€by?Ì€€€€€€€€MS.€HARRINGTON:€€Yes,€please.€€It€could€be€anÌimportant€person.€€It€might€not€be€the€police.€€We're€inÌWashington€on€Pennsylvania€Avenue.Ì€€€€€€€€MR.€STEIMEL:€€We€also€would€like€to€seeÌencouragement€of€full€access€to€900€and€other€blockingÌinformation.€€Blocking€information€is€currently€providedÌat€four€different€points€in€the€dialing€system.€€ThereÌis€900€blocking€in€the€local€exchange€carrier€CO,€whichÌis€not€available€to€interexchange€carriers€andÌinformation€providers.€€They€are€information€digits€thatÌare€taken€downline.Ì€€€€€€€€Then€interexchange€carriers€and€informationÌproviders€have€their€own€blocking€data€base,€then€thereÌis€the€information€contained€in€LIDB.€€All€of€thoseÌÐ	   	 ì,'2   Ðitems€should€be€available€to€every€party€who€is€carryingÌany€information€service€call€so€that€they€can€use€thatÌ--€use€that€blocking€information€to€prevent€consumersÌthat€don't€want€access€and€information€services€fromÌgetting€onto€those€platforms.Ì€€€€€€€€So,€that€would€be€more€of€our€request€for€fullÌcompetitive€parity€between€all€information€serviceÌproviders€and€interexchange€carriers.€€We€would€likeÌfull€provision€of€the€billing€options€to€permit€theÌTDDRA-required€disclosures€to€be€provided€to€consumersÌfor€all€information€services,€not€just€the€ones€thatÌhave€traditionally€been€provided,€and€withoutÌrestrictions€on€the€dialed€number,€description,€contentÌor€any€other€restriction€in€the€computerized€billingÌprocess,€so€that€carriers€can€at€their€discretion€alwaysÌprovide€the€disclaimer€to€consumers€for€anything€that€isÌnot€simply€1-plus€calling€your€grandmother.Ì€€€€€€€€Those€are€our€primary€interests€in€participatingÌin€this€proceeding,€and€we€look€forward€to€the€commentsÌof€the€other€parties€over€the€next€two€days.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Walt.Ì€€€€€€€€I€mentioned€that€our€most€important€partner€hereÌat€the€FTC€is€the€National€Association€of€AttorneysÌGeneral€in€the€states€in€enforcement€and€in€sort€ofÌneedling€out€these€policies,€and€I€have€saved€the€lastÌÐ	   	 ì,'2   Ðword€on€this€opening€statement€of€interests€for€DavidÌGillis,€who€is€representing€the€state€attorneysÌgeneral.Ì€€€€€€€€MR.€GILLIS:€€Thank€you€very€much,€Eileen.Ì€€€€€€€€It's€good€to€be€here€today.€€I€also€was€hereÌsome€time€ago€when€the€first€rule€was€the€subject€of€aÌsimilar€workshop,€and€at€that€time,€the€state€attorneyÌgenerals€were€involved€and€under€the€auspices€of€theÌNational€attorney€general€Association,€which€has€aÌspecific€subcommittee€involving€representatives€of€40Ìstates,€and€Jill€and€I€serve€on€that€subcommittee,€andÌthat's€what€brings€us€here€today.Ì€€€€€€€€As€the€chief€law€enforcement€officers€in€theÌstates,€consumers€look€to€the€state€attorney€general€toÌdeal€when€they€find€problems€with€--€in€the€marketplace,Ìwhen€they€feel€they€have€been€treated€unfairly€orÌsomeone€has€taken€advantage€of€them.€€And€unfortunatelyÌfrom€the€inception€of€the€900€number€industry€there€hasÌbeen€a€considerable€number€of€complaints€that€have€beenÌfiled€with€the€offices€of€state€attorney€generals.Ì€€€€€€€€Fortunately,€through€the€efforts€of€the€FederalÌTrade€Commission€and€the€Federal€CommunicationsÌCommission,€as€well€as€industry€representatives,€theÌcomplaints€about€900€numbers€have€declined,€but€asÌeveryone€has€noted,€we€have€seen€problems€migrate€toÌÐ	   	 ì,'2   Ðother€dialing€patterns.Ì€€€€€€€€There€are€three€initial€points€I€would€like€toÌstress.€€The€first€is€that€we€believe€the€approach€takenÌby€the€900€number€rule€has€been€very€effective,€and€theÌreason€why€it's€been€effective€in€our€view€is€that€itÌrequires€up-front€disclosure€so€that€people€know€whatÌthey€are€getting.Ì€€€€€€€€Secondly,€it€provides€a€mechanism€to€stopÌunauthorized€call€through€call€blocking€in€the€FederalÌCommunication€rule,€and€thirdly,€there€is€a€disputeÌresolution€procedure€that€is€readily€accessible€toÌpeople€who€feel€they€have€been€treated€unfairly.Ì€€€€€€€€We€want€to€see€those€protections€and€thoseÌprovisions€continued.€€To€look€at€solutions€to€theseÌproblems€simply€as€a€problem€for€enforcement€is€notÌenough.€€The€ability€of€people€to€get€into€this€industryÌwho€are€inclined€to€use€sharp€practices€is€simply€tooÌeasy,€and€the€prospect€of€enormous€gain€resulting€fromÌthose€practices€continues€to€be€an€attraction.€€And€thisÌI€submit€to€you€is€what€we€have€seen€when€we€seeÌproviders€go€to€other€dialing€services.Ì€€€€€€€€The€second€point€that€I€want€to€make€is€that€theÌproblem€of€chargebacks€should€not€be€a€basis€to€diluteÌthe€protections€of€the€rule.€€State€attorneys€generalÌprosecute€businesses€that€engage€in€fraud.€€We€certainlyÌÐ	   	 ì,'2   Ðdon't€support€consumers€that€engage€in€fraud.Ì€€€€€€€€Having€said€that,€though,€we€would€point€outÌthat€there€are€alternative€systems€that€informationÌproviders€could€use€that€could€eliminate€their€specificÌproblem€for€chargebacks.€€I€would€also€note€that€in€aÌderegulated€market,€there€are€few€guarantees,€and€thatÌthe€risk€of€who€information€providers€want€to€deal€withÌshould€be€borne€by€them,€not€the€local€exchange€companyÌand€certainly€not€the€consumer.€€So,€again,€the€secondÌpoint€is€that€the€problem€of€chargebacks€should€not€be€aÌbasis€to€diminish€the€protections€of€the€rule.Ì€€€€€€€€Finally,€we€support€--€the€state€attorneysÌgeneral,€support€expanding€the€definition€of€the€rule€toÌcover€pay-per-call€services€that€are€available€throughÌother€dialing€patterns.€€Once€again,€we€are€seeing€theÌsame€sort€of€consumer€frauds€that€were€characteristic€ofÌthe€early€use€of€900€numbers€and€international€numbers.ÌWe€are€seeing€work-at-home€schemes,€scam€travelÌofferings€and€related€types€of€services€that€do€notÌprovide€the€service€they€promise€to€provide.Ì€€€€€€€€So,€in€conclusion,€we're€here€today,€and€weÌbelieve€that€by€undertaking€this€effort,€the€FederalÌTrade€Commission€will€provide€a€firm€basis€for€theÌgrowth€of€legitimate€pay-per-call€services,€yetÌcontinuing€protections€for€consumers€that€want€to€useÌÐ	   	 ì,'2   Ðthose€services€and€protections€from€unauthorized€andÌunwanted€charges.Ì€€€€€€€€Thank€you€very€much,€Eileen.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Dave,€and€thank€allÌof€you.€€We€are€three€minutes€ahead€of€schedule.€€YouÌall€were€just€superb€in€this€first€session.€€You€areÌfollowing€the€rules€well.Ì€€€€€€€€Let€me€just€give€you€all€an€opportunity€to€standÌup€and€get€more€coffee.€€It's€excellent,€it's€free,€it'sÌin€the€back,€and€we€are€just€going€to€take€aÌthree-minute€stretch,€and€right€at€10:00,€we€are€goingÌto€pick€up,€and€the€first€discussion€is€going€to€be€aÌdiscussion€of€the€industry€perspective,€which€doesn'tÌmean€industry€only,€but€we€want€to€discuss€theirÌperspective€on€this€chargeback€problem.Ì€€€€€€€€Thank€you.Ì€€€€€€€€òò(A€brief€recess€was€taken.)Ð   	 Ü     Ðóó€€€€€€€€MS.€HARRINGTON:€€All€right,€let's€reconvene,Ð   	 l "   Ðplease.Ì€€€€€€€€As€the€agenda€indicates,€we€would€like€someÌdiscussion€during€this€next€segment€on€variousÌassertions€that€are€raised€from€industry€members€aboutÌthe€problem€of€chargebacks,€and€I€guess€I'd€like€toÌbegin€with€just€a€quick€check€on€a€simple€factualÌquestion,€and€that€is,€what€is€the€rate?€€We€hear€20ÌÐ	   	 ì,'2   Ðpercent,€we€hear€50€percent.Ì€€€€€€€€Mark,€do€you€want€to€phrase€that€question?€€Oh,ÌMark's€got€his€mouth€full.Ì€€€€€€€€MR.€HERTZENDORF:€€Yes.€€ISA€in€their€commentsÌindicated€that€the€overall€chargeback€rate€was€20Ìpercent.€€Perhaps€they€were€referring€strictly€to€900Ìnumbers€and€maybe€the€40€and€50€percent€figure€that'sÌbeen€touted€refers€to€particular€services€orÌinternational.€€So,€I'm€just€wondering,€is€the€figure€20Ìor€40€or€50€percent,€and€is€it€different€forÌinternational€versus€the€900€number?Ì€€€€€€€€MR.€R.€GORDON:€€If€I€may?Ì€€€€€€€€MS.€HARRINGTON:€€Richard?€€And€let€me€remind€youÌagain€that€if€you€want€to€be€recognized,€just€turn€yourÌtent€up.€€Thanks.Ì€€€€€€€€MR.€R.€GORDON:€€I€think€one€of€the€problems€hereÌis€what€is€a€chargeback€or€the€definition€of€what's€aÌchargeback,€and€if€you're€taking€a€look€at€the€technicalÌdefinition€of€what€a€chargeback€is,€the€chargeback€rateÌmay€actually€be€20-25€percent;€however,€we€asÌbusinesspeople€look€at€how€much€revenue€goes€back,€andÌit's€not€just€chargebacks.€€It's€uncollecteds,€it's€1001Ìdifferent€adjustments€that€happen,€and€I€would€beÌdelighted€to€defer€to€some€of€the€experts€behind€me€inÌthe€billing€and€collection€area.€€It's€not€justÌÐ	   	 ì,'2   Ðchargebacks.Ì€€€€€€€€The€other€thing€is€that€getting€a€true€rate€isÌalmost€impossible,€because€what's€happening€and€what€hasÌcontinued€to€happen€is€that€the€60-day€provision€in€theÌregulations€is€totally€ignored.€€If€a€consumer€calls€inÌsix€months,€eight€months,€nine€months€after€they€haveÌbeen€using€pay-per-call€services€and€they€tell€theirÌlocal€exchange€carrier,€I€never€did€this,€that€entireÌblock€of€transactions€winds€up€being€charged€back.Ì€€€€€€€€I€certainly€agree€with€the€various€comments€madeÌby€the€consumer€protection€groups€and€the€attorneyÌgenerals€where,€you€know,€if€there€is€someone€that'sÌmade€four€or€five€or€if€there€is€four€or€five€billingsÌon€a€statement€or€maybe€statements€for€a€month€or€two,Ìthat€that's€something€that€could€be€a€billing€error,€itÌcould€be€some€sort€of€mischievous€behavior€by€someone,Ìbut€we're€seeing€more€and€more€and€more€in€the€industryÌthat€some€of€the€LECs€are€actually€using€the€extremelyÌloose€interpretation€of€the€rules€almost€as€a€way€toÌoffset€their€own€bad€debt.Ì€€€€€€€€There€is€a€number€of€cases€--€and€again,€IÌbelieve€that€the€people€here€with€the€TSIA€would€be€ableÌto€testify€to€this€--€where€when€we€research€these€andÌwe€find€nine€months'€worth€of€pay-per-call€chargebacksÌsuddenly€come€back,€we€actually€find€that€a€consumerÌÐ	   	 ì,'2   Ðhasn't€paid€his€phone€bill€or€her€phone€bill€for€threeÌor€four€months.€€And€somehow,€they€realize€that€if€theyÌgot€a€chargeback€for€$600€worth€of€pay-per-call,€theÌ$200€deniable€call€records€for€which€they€could€loseÌtheir€services€was€suddenly€offset€by€this€credit,Ìbecause€they€paid€for€five€or€six€months€on€their€phoneÌbill€their€other€charges,€and€then€suddenly€they€areÌdisputing€the€entire€thing.Ì€€€€€€€€There€is€a€problem€here€with€perception,€and€theÌperception€is€that€the€900€call€is€a€completelyÌrefundable€event€irrespective€of€how€long€it's€been€onÌthe€statement.€€So,€when€you€ask€about€chargebacks,€it'sÌvery€hard€to€come€up€with€a€real€hard€number,€becauseÌtoday€it€might€be€30€percent,€but€tomorrow€you€might€getÌa€year's€worth€of€chargebacks€back€on€somebody€thatÌdrives€that€particular€program€up€to€35€or€40€percent.Ì€€€€€€€€I€hope€I've€addressed€the€issue.Ì€€€€€€€€MS.€HARRINGTON:€€Let's€hear€--€yeah,€I€wasÌactually€hoping,€Kim,€that€you€would€have€something€toÌsay€on€this.Ì€€€€€€€€MS.€WILLIAMS:€€Yes,€Kim€Williams.€€I€would€likeÌto€explain€how€our€billing€contracts€work€and€how€aÌchargeback€can€occur.Ì€€€€€€€€MS.€HARRINGTON:€€Can€you€before€you€do€thatÌanswer€the€question€about€what€is€the€rate€in€yourÌÐ	   	 ì,'2   Ðview?Ì€€€€€€€€MS.€WILLIAMS:€€I€honestly€don't€know€per€--€IÌmean,€we€track€it€per€carrier€on€a€900€basis,€and€thatÌhas€dropped€from€--€we€used€to€have€highs€of€40-45Ìpercent.€€I€would€say€that€has€dropped€for€some€carriersÌunder€10€percent,€some€still€run€at€15€or€20€percent.ÌThat's€on€900.Ì€€€€€€€€Again,€on€the€international€audiotext€side,€weÌcan't€really€track€it.€€One€international€call€is€likeÌany€other€international€call€in€our€billing€system.€€WeÌcan't€tell€which€ones€are€audiotext€and€which€onesÌaren't.€€They€are€all€international€numbers.€€So,€thereÌis€no€dialing€code€or€no€way€for€us€to€differentiate€aÌcall€to€Guyana.Ì€€€€€€€€MS.€HARRINGTON:€€And€Richard,€yes€or€no€onÌthis:€€Is€your€assessment€based€only€on€900€dialingÌpattern€calls€when€you€talk€about€this€chargeback€issueÌor€are€you€including€something€other€than€--Ì€€€€€€€€MR.€R.€GORDON:€€No,€right€now€this€is€only€onÌ900.€€That's€the€only€thing€we€have€done€the€fullÌresearch€on.Ì€€€€€€€€MS.€HARRINGTON:€€Okay.Ì€€€€€€€€Kim,€go€ahead.Ì€€€€€€€€MS.€WILLIAMS:€€Okay.€€When€we€set€up€a€billingÌand€receivables€contract,€we€basically€purchase€theÌÐ	   	 ì,'2   Ðreceivables€of€a€company€submitting€billing€to€us.€€So,Ìif€they€submit€a€hundred€dollars€worth€of€billing€to€me,ÌI€purchase€that€hundred€dollars€at€some€discountingÌrate.€€I€discount€it€for€uncollectibles,€and€for€eachÌcarrier€that's€set€for€whatever€that€carrier's€rate€is.ÌIf€it's€3€percent,€then€I€deduct€the€3€percent€forÌuncollectibles.€€I€deduct€another€percentage€for€anÌadjustment€rate.€€So,€out€of€the€hundred€they€sent€me,€IÌpay€them€90.€€Does€that€make€sense?Ì€€€€€€€€MS.€HARRINGTON:€€Question:€€Do€you€mean€carrierÌor€information€provider?Ì€€€€€€€€MS.€WILLIAMS:€€I€am€saying€carrier.€€Billing€andÌcollection€customer,€which€in€my€opinion€is€not€an€IP.ÌIt€is€a€carrier€or€billing€clearinghouse€who€may€alsoÌprovide€some€information€services,€probably€bills€fromÌmany€companies€who€do€provide€information€services.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you.Ì€€€€€€€€MS.€WILLIAMS:€€So,€when€I€purchase€that€accountsÌreceivable,€I€am€taking€it€minus€a€certain€level€ofÌuncollectibles€and€adjustments.€€I€bill€it€to€an€endÌuser€customer€and€get€payment€from€them€some€number€ofÌdays€later,€and€it€--€truthfully,€my€payment€to€theÌcarrier€is€based€on€a€number€of€days€later€that€I€knowÌthat€customer€is€going€to€pay.€€So,€I€may€pay€that€$90Ì40€days€after€I€receive€it€from€the€B&C€customer.€€So,ÌÐ	   	 ì,'2   Ðis€everybody€following€me€on€that?Ì€€€€€€€€So,€when€I€do€that,€I€purchase€it,€but€I€don'tÌpurchase€it€expecting€to€eat€that€--€any€of€that€moneyÌthat's€not€paid.€€As€I€said,€I€get€--€I€don't€pay€themÌfor€what€I€think€adjustments€and€uncollectibles€willÌbe.€€So,€I€bill€the€customer,€the€customer€I'm€assumingÌis€going€to€pay€his€charges.€€If€he€calls€me€and€asksÌfor€an€adjustment,€depending€on€whether€I€do€thatÌcarrier's€billing€inquiry€or€not,€which€means€handle€theÌend€user€customer's€questions,€I€may€issue€anÌadjustment,€or€if€the€carrier€--€if€the€B&C€customerÌhandles€the€billing€inquiry,€I€may€refer€him€back€to€theÌcarrier€or€customer€who€bills€to€me.Ì€€€€€€€€So,€if€an€end€user€calls€me€and€says€I€didn'tÌmake€these€900€calls,€if€I€do€billing€inquiry,€I€handleÌthat€complaint.€€If€I€don't,€I€pass€him€back€to€the€B&CÌcustomer.€€If€he€said€he€didn't€make€the€calls,€I€goÌthrough€certain€steps€to€try€to€sustain€the€charges€toÌsee€who€could€have€made€the€calls,€what€time€were€theÌcalls€made,€does€this€customer€normally€make€900-chargedÌcalls.Ì€€€€€€€€In€the€end,€if€the€customer€still€refuses€toÌpay,€I€don't€really€have€an€alternative€other€than€toÌremove€those€charges€from€the€bill.€€I€am€not€going€toÌeat€the€charges€myself,€Southwestern€Bell,€and€theÌÐ	   	 ì,'2   Ðcustomer,€if€he's€not€going€to€pay€them,€I€can't€takeÌaway€his€local€service€for€nonpayment.€€So,€I€eitherÌleave€the€money€out€there€forever€or€I€send€it€back€toÌthe€carrier,€and€--€or€to€the€B&C€customer.€€So,€in€thisÌcase,€I€would€send€it€back€if€the€customer€can't€pay.Ì€€€€€€€€When€he€calls€me€today,€60€days€from€now,€90Ìdays€from€now,€a€hundred€days€from€now,€I€don't€reallyÌhave€a€choice€other€than€either€leave€that€balance€outÌthere€forever,€and€in€that€case€I've€purchased€theÌaccounts€receivable,€so€it's€my€money€now€that€I'm€notÌgetting€collected,€or€I€send€it€back€to€the€company€whoÌsent€it€to€me€for€billing.Ì€€€€€€€€MS.€HARRINGTON:€€Do€you€ever€--€do€you€everÌexplore€the€option€of€bringing€some€sort€of€action€toÌcollect?Ì€€€€€€€€MS.€WILLIAMS:€€On€900€charges€--€well,€on€--€asÌfar€as€collection€goes,€my€action€is€to€threatenÌdisconnection€of€nonpayment€of€the€service.€€I€mean,Ìthat's€truly€what€we€get€to,€is€either€pay€your€bill€orÌyou€lose€your€service.€€Well,€I€can't€threaten€that€withÌ900.Ì€€€€€€€€MS.€HARRINGTON:€€That's€why€I'm€asking€if€youÌmight€be€slightly€more€imaginative€in€this€area.€€IÌmean,€that€is,€most€creditors€also€consider€or€resort€toÌsome€sort€of€legal€process.ÌÐ	   	 ì,'2   Ð€€€€€€€€MS.€WILLIAMS:€€I€don't€do€that€on€900€charges.ÌI€send€them€back€to€the€carrier€--€to€the€provider€toÌtake€that€action€themselves.€€So,€I€send€them€back€withÌrecourse€to€that€carrier,€so€that€he€can€collect€thoseÌcharges.Ì€€€€€€€€MS.€HARRINGTON:€€Okay.Ì€€€€€€€€MS.€WILLIAMS:€€If€there€are€not€--€if€there€areÌdeniable€charges€that€aren't€paid,€then€I€pursueÌdisconnection€for€nonpayment€of€charges.€€If€someÌportion€of€that€is€900,€that€900€still€goes€back€to€theÌprovider.€€I€don't€send€that€to€an€outside€collectionÌagency.€€The€providers€usually€want€it€back€as€quick€asÌthey€can€get€it€back€so€they€can€take€their€ownÌcollection€action,€but€we€don't€send€those€off€to€anÌoutside€collection€agency,€only€the€deniable€chargesÌthat€are€there.Ì€€€€€€€€So,€there€is€two€ways€I€could€send€them€back,€anÌadjustment€on€a€live€account€or€a€write-off.€€When€IÌfinally€say€this€customer€is€never€going€to€pay€thisÌwhole€bill,€which€includes€deniable€charges,€I€write€offÌthe€charges,€and€I€send€them€back€for€collection€to€theÌB&C€customer.€€So,€the€60-day€rule€doesn't€--€stillÌdoesn't€--€can't€hold€true€for€what€we€do.€€There€is€noÌother€choice€after€that,€and€my€understanding€of€the€60Ìdays€is€that€you€have€to€give€the€customer€60€days.ÌÐ	   	 ì,'2   ÐFrom€a€LEC€perspective,€we€don't€look€at€it€as€that'sÌall€that€customer€can€have.Ì€€€€€€€€MS.€HARRINGTON:€€All€right,€Joel?Ì€€€€€€€€MR.€DICHTER:€€Thank€you,€Eileen.Ì€€€€€€€€Let€me€see€if€I€can€explain€how€internationalÌchargebacks€have€worked€a€little€differently€than€havingÌ900,€and€they€are€starting€to€more€mirror€900€nowadaysÌthan€they€have€in€the€past.Ì€€€€€€€€With€an€international€call,€it's€a€direct-dialÌcall€generally€where€the€consumer€uses€his€normal€longÌdistance€carrier,€whoever€his€picked€carrier€is€to€makeÌa€call€to€the€overseas€location.€€That€call€is€thenÌbilled€by€their€interexchange€or€long€distance€carrierÌas€part€of€their€costs€and€as€part€of€their€bill€andÌpaid€to€them.€€So,€there€is€--€wasn't€a€separate€billingÌpage€like€on€a€900.€€So,€the€incidence€of€chargebacksÌwouldn't€be€available€to€the€provider€of€the€services.ÌIt€would€be€between€the€long€distance€carriers€and€theÌconsumers.Ì€€€€€€€€The€industry€--€as€we€are€starting€to€work€moreÌand€the€foreign€telephone€companies€have€worked€moreÌwith€the€long€distance€carriers€to€bring€about€changesÌin€that€relationship€to€a€point€now€where€a€number€ofÌcompanies€have€entered€into€arrangements€withÌinternational€long€distance€carriers,€such€as€AT&T,€toÌÐ	   	 ì,'2   Ðpass€back€chargebacks€to€consumers,€and€in€turn€theyÌhave€taken€a€more€liberal€approach€with€their€customersÌin€handling€chargebacks€for€international€long€distanceÌcalls.€€This€is€not€a€real€old€phenomenon,€it's€a€fairlyÌrecent€phenomenon,€and€we€have€seen€in€that€short€timeÌspan€chargeback€levels€in€the€10€to€20€percent€range.Ì€€€€€€€€When€you€talk€about€international,€we€also€--€IÌthink€we€need€to€make€the€distinction€that€there€hasÌbeen€a€change€through€the€Telecommunications€Act€ofÌ1996.€€A€lot€of€international€calls€prior€to€that€timeÌwent€through€a€gateway,€such€as€a€500€area€code,€a€10XXXÌexchange€or€an€800€number€and€then€was€rebilled€throughÌa€tariff€filed€with€the€Commission.Ì€€€€€€€€In€the€Telecommunications€Act€of€1996,€thatÌexemption€for€filing€tariffs€was€removed,€the€gatewaysÌthrough€500€and€10XXX€were€no€longer€permitted€and€haveÌbeen€stopped.€€So,€now€when€we€talk€about€internationalÌwe€are€really€talking€about€just€a€direct-dial€type€ofÌsituation,€and€in€that€situation,€there€are€increasingÌarrangements€of€handling€chargebacks€between€the€longÌdistance€carrier€and€the€foreign€telephone€company.Ì€€€€€€€€MS.€HARRINGTON:€€Mark,€did€you€have€a€question?Ì€€€€€€€€MR.€HERTZENDORF:€€I'm€sorry,€did€you€say€thatÌthe€EXEs€are€--€have€been€negotiating€different€kinds€ofÌarrangements€so€that€they€can€pass€customer€chargebacksÌÐ	   	 ì,'2   Ðto€--€who€is€it?€€Is€it€the€IP€or€the€foreign€telephoneÌcompany?Ì€€€€€€€€MR.€DICHTER:€€It€would€be€the€foreign€telephoneÌcompany.€€As€part€of€the€arrangement,€the€way€theÌcompensation€with€a€foreign€telephone€company€works€isÌthey€receive€a€settlement€rate€as€part€of€an€accountingÌarrangement€where€AT&T€or€MCI€or€whoever€pays€an€amount,Ìa€per-minute€amount,€to€the€foreign€telephone€companyÌfor€terminating€the€call,€for€using€their€facilities€toÌterminate€the€call,€they€pay€them€a€settlement€rate.ÌSo,€what€we€are€talking€about€when€we€are€talking€aboutÌa€chargeback€is€on€that€settlement€rate€paid€to€theÌforeign€telephone€company.Ì€€€€€€€€MR.€HERTZENDORF:€€And€this€is€becoming€a€lotÌmore€common,€and€do€you€know€anything€about€how€oftenÌthese€contracts€are€negotiated€--€renegotiated?Ì€€€€€€€€MR.€DICHTER:€€I€would€say€these€negotiations€areÌconstantly€ongoing,€and€there€has€been€a€lot€of€effortÌby€the€Federal€Communications€Commission€in€this€areaÌdealing€with€trying€to€reduce€the€accounting€rates€thatÌare€--€go€between€the€foreign€telephone,€foreignÌcountries€and€the€long€distance€carries.€€So,€it's€anÌongoing€process€of€negotiation.Ì€€€€€€€€MS.€HARRINGTON:€€I'm€going€to€ask€us€to€hold€onÌinternational€now.€€That's€sort€of€the€next€issue€thatÌÐ	   	 ì,'2   Ðwe're€going€to€get€to,€and€before€we€hear€from€Don€andÌPeter,€Adam,€do€you€have€a€question?Ì€€€€€€€€MR.€COHN:€€Yes,€a€point€that€was€coming€upÌearlier€with€regard€to€LEC€billing€practices,€I€justÌwanted€to€ask,€do€you€feel€that€it's€a€--€well,€I€wantÌto€hear€from€other€parties,€as€well,€how€they€feel€aboutÌthe€practice€of€LECs€refraining€from€exercising€theÌcreditors'€rights€with€regard€to€the€--€with€the€900Ìnumber€chargebacks€and€whether€that€is€a€reasonableÌpractice€to€send€those€charges€back€after€that€longÌperiod€of€time€instead€of€taking€an€action€that€theyÌwould€with€regard€to€their€own€charges.€€I€wanted€toÌhear€what€the€LECs€had€to€say€about€that€and€also€--Ìactually,€what€the€LEC€--€the€other€LEC€is€not€here€--Ì€€€€€€€€MS.€WILLIAMS:€€The€LEC.Ì€€€€€€€€MR.€COHN:€€--€had€to€say€about€that.Ì€€€€€€€€MS.€HARRINGTON:€€And€I€guess€we€understand€--Ìwith€respect€to€their€own€charges€we€understand€theyÌhave€the€option€to€terminate€service,€but€perhaps€theÌquestion€is€is€it€reasonable€to€refrain€from€exercisingÌother€creditors'€rights€here?€€So,€we€would€like€to€hearÌa€comment€on€that.Ì€€€€€€€€Don,€do€you€have€anything€on€that?€€You're€next,Ìand€we€will€come€back€to€you,€Kim.Ì€€€€€€€€MR.€KLUG:€€I€was€going€to€comment€on€the€part€ofÌÐ	   	 ì,'2   Ðthe€question€about€what€is€the€level€of€chargebacks.Ì€€€€€€€€MS.€HARRINGTON:€€Okay.Ì€€€€€€€€MR.€KLUG:€€I€think€that€it's€a€good€question.ÌIt's€also€a€very€difficult€question.€€It€would€be€likeÌasking€what€the€average€weight€of€the€people€in€the€roomÌwere.€€You€have€some€distribution€over€some€mean,€andÌthe€factors€that€--Ì€€€€€€€€MR.€HERTZENDORF:€€What's€the€mean?Ì€€€€€€€€MR.€KLUG:€€Okay,€I'll€give€you€the€mean,€but€letÌme€give€the€caveats€before€I€give€you€the€mean.€€I€thinkÌthe€level€of€chargebacks€is€a€function€of€three€things.ÌNumber€one,€it's€the€price€per€minute€or€price€of€aÌcall.€€Chargeback€rates€for€a€50€cent€call€are€going€toÌbe€lower€than€chargebacks€for€calls€that€average,€youÌknow,€$30.€€It's€also€a€function€of€the€application.ÌChargeback€rates€for€entertainment-oriented€applicationsÌtend€to€be€higher€than€those€for,€for€example,€pollingÌapplications.Ì€€€€€€€€And€the€last€factor€is€I€think€the€experience€ofÌthe€person€making€the€call.€€Someone€that€has€used€900Ìcalls€repeatedly€as€a€regular€user€will€I€thinkÌunderstand€how€the€--€how€the€system€works€and€how€theyÌcan€get€refunds€easier€than€someone€that€doesn't.Ì€€€€€€€€To€answer€your€question,€Mark,€MCI's€experienceÌis€that€chargebacks€across€the€board€are€in€the,€youÌÐ	   	 ì,'2   Ðknow,€10€to€15€percent€range,€and€because€our€mix€ofÌcustomers€changes€and€our€mix€of€applications€changes,Ìthat's€a€fairly€fluid€number.Ì€€€€€€€€MR.€HERTZENDORF:€€Now,€when€you€say€that,€areÌyou€referring€to€a€broad€definition€or€are€you€justÌtalking€about€incollectibles€or€is€this€a€narrowerÌdefinition€than€people€have€made€the€call€and€neverÌpaid?Ì€€€€€€€€MS.€HARRINGTON:€€Mark,€could€you€use€theÌmicrophone€so€everybody€can€hear€you?Ì€€€€€€€€MR.€HERTZENDORF:€€I'm€just€asking€about€sort€ofÌthe€definition€you're€using€here€with€regard€toÌchargebacks.€€Is€this€--€when€you€say€--€you€are€sayingÌ10€to€15€percent€of€billings€are€uncollectible?Ì€€€€€€€€MR.€KLUG:€€No,€I'm€referring€--€I'm€taking€outÌof€that€bad€debt,€you€know,€customers€that€simply€moveÌor,€you€know,€for€whatever€reason€the€RBOCs€cannot€--Ìcannot€collect€from.€€So,€these€are€calls€that€wereÌmade,€people€acknowledge€the€call€and€have€been€billedÌby€a€LEC€and€get€refunds€for€whatever€reasons.Ì€€€€€€€€MR.€HERTZENDORF:€€Do€you€have€any€idea€what€theÌpercentage€would€be€for€a€much€broader€definition€thatÌwould€be€--€basically€be€percentage€of€--€percentage€ofÌ--Ì€€€€€€€€MR.€R.€GORDON:€€Revenue,€revenue.ÌÐ	   	 ì,'2   Ð€€€€€€€€MR.€HERTZENDORF:€€Okay,€that€will€do€it,€maybeÌthe€revenue€--€the€ratio€of€the€revenue€collected€to€theÌrevenue€you€have€tried€to€bill?Ì€€€€€€€€MR.€KLUG:€€No,€I€have€--€not€offhand.€€I€wouldÌsay€it's€probably€another€3€to€5€percent,€something€inÌthat€range.Ì€€€€€€€€A€couple€other€caveats,€one€is€these€figuresÌdon't€include€applications€for€which€MCI€does€notÌprovide€billing€and€collection€services.€€Those€tend€toÌbe€adult-oriented€applications,€sweepstakes,€games€ofÌchance,€job€lines.€€We€have€several€categories€that€weÌdon't€provide€billing€and€collection€services€for.Ì€€€€€€€€The€other€comment€is€this€pertains€only€to€900Ìcalls,€not€international-dialed€calls€or€other€dialingÌplans,€such€as€800.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Don.Ì€€€€€€€€Peter€--€I'm€sorry,€Adam,€do€you€have€aÌquestion?Ì€€€€€€€€MR.€COHN:€€I€just€had€a€question€to€follow€up€onÌthose€points,€which€I€thought€were€very€interesting.ÌYou€mentioned€the€three€factors€that€--€that€worked€toÌaffect€a€chargeback€rate,€and€I€was€wondering,€one€ofÌthem€you€mentioned€was€familiarity€of€the€caller€withÌthe€way€the€system€works.€€How€does€that€work?€€DoesÌthat€mean€that€the€more€familiar€a€caller€becomes€with€aÌÐ	   	 ì,'2   Ðsystem,€the€less€likely€there€is€to€be€a€chargeback€orÌmore€likely?Ì€€€€€€€€MR.€KLUG:€€I€think€it's€the€more€likely.€€MoreÌoften€than€not,€when€we€get€a€chargeback€back€from€theÌLEC,€and€last€year€I€think€our€average€looked€like€aboutÌ$62€per€ANI€or€per€subscriber,€that€doesn't€represent€aÌsingle€call.€€That€represents€multiple€calls.€€So,€it'sÌnot€a€case€of€one€person€making€a€900€call€and€askingÌfor€a€refund.€€More€often€than€not,€it's€multipleÌcalls.Ì€€€€€€€€The€other€point,€just€to€emphasize€theÌexperience€of€the€user,€we€found€that€last€year,€1Ìpercent€of€the€people€that€we€gave€refunds€toÌrepresented€21€percent€of€the€total€dollars€that€weÌrefunded.€€So,€it's€very€skewed€in€terms€of,€you€know,Ìpeople€who€get€refunds.Ì€€€€€€€€MR.€COHN:€€Is€that€also€a€factor€of€the€type€ofÌservice€that€--€the€thing€I'm€trying€to€get€at€actuallyÌis,€you€mentioned€two€other€factors,€the€function€of€theÌapplication€was€one€of€them.€€To€what€extent€do€youÌthink€that€the€application€affects€the€chargeback€rateÌalone€and€to€what€extent€does€the€function€--€does€theÌapplication€attract€a€repeat€caller,€thereby€sort€ofÌworking€into€the€other€factor€that€you€mentioned?€€IsÌthere€something€inherent€about€a€product€that's€beingÌÐ	   	 ì,'2   Ðoffered€that€increases€the€rate€of€chargebacks?Ì€€€€€€€€MR.€KLUG:€€Well,€all€of€these€factors€areÌsomewhat€related.€€The€entertainment€applications€thatÌtend€to€have€higher€chargeback€rates€also€tend€to€have€aÌhigher€price€per€call.€€They€tend€to€be,€oh,€anywhereÌfrom€$3€to€$5€a€minute,€and€the€average€end€userÌbilling,€you€know,€can€go€anywhere€from€$25€to€$50,€inÌthat€range,€versus€a€short€holding€time€duration€call,Ìlike€you€might€see€on€NBC€DateLine€or€something,€voteÌwhether€you€think€O.€J.€Was€guilty€or€something,€mightÌbe€50€cents,€a€dollar,€and€people€see€less€--€I€guessÌthere€is€a€utility€associated€with€that,€as€well.Ì€€€€€€€€MS.€HARRINGTON:€€Is€anyone€aware€of€aÌhigher-priced€information€service€not€in€theÌentertainment€category?Ì€€€€€€€€Don?Ì€€€€€€€€MR.€KLUG:€€We€have€some€business-to-businessÌapplications.€€One€of€our€customers€is€a€bank,€and€theyÌuse€900€service€for€their€clients€to€submit€mortgageÌinformation€when€they€are€buying€and€selling€mortgages,Ìand€it's€a€--€it's€a€$50€transaction.Ì€€€€€€€€The€State€of€Ohio€has€a€900€application€forÌtheir€Brady€Gun€Control€Bill.€€They€require€gun€dealersÌto€call€900€numbers€to€determine€if€the€personÌpurchasing€the€gun€has€a€prior€criminal€record,€and€IÌÐ	   	 ì,'2   Ðbelieve€that's€about€a€$35€flat-rate€call.Ì€€€€€€€€MS.€HARRINGTON:€€Do€you€have€any€information€onÌchargebacks€for€those€types€of€accounts?Ì€€€€€€€€MR.€KLUG:€€They€are€--€they€are€pretty€small,ÌI'd€say€single€digit.Ì€€€€€€€€MS.€HARRINGTON:€€Okay.Ì€€€€€€€€Dave?Ì€€€€€€€€MR.€GILLIS:€€As€far€as€the€information€aboutÌchargebacks,€I€guess€--€I€think€it's€important€to€getÌwhat€the€facts€are€as€opposed€to€the€level€ofÌgeneralization€that€we€usually€see€reported€in€theÌpress,€and€to€follow€up€on€that,€I'm€curious€whether€theÌindustry€maintains€statistics€that€would€identifyÌchargebacks€by€type€of€billing€system€that's€used.Ì€€€€€€€€It's€my€understanding€that€there€are€a€varietyÌof€ways€that€people€can€agree€to€pay€for€pay-per-callÌservices,€either€through€subscription€arrangements€orÌother€sorts€of€mechanisms€simply€than€on€a€per-callÌbasis,€and€it€would€be€significant€to€me€if€chargebacksÌassociated€with€presubscription€arrangements€wereÌconsiderably€less€than€those€associated€with€sort€of€theÌother€forms€of€billing€systems.Ì€€€€€€€€The€other€thing€that€would€be€helpful,€I€think,Ìis€to€understand€what€the€information€providersÌthemselves€do€to€follow€up€with€respect€toÌÐ	   	 ì,'2   Ðuncollectibles€and€chargebacks€and€what€efforts€theyÌmake€to€pursue€their€own€creditor€rights€and€what€theirÌexperience€has€been.Ì€€€€€€€€The€third€thing€and€the€point€I'd€like€to€makeÌin€this€area€is€an€inquiry€as€to€what€efforts€have€beenÌmade€by€the€industry€to€identify€at€the€front€end€ofÌthis€transaction€who€are€going€to€be€chargebackÌcandidates.€€Most€businesses€select€who€they€are€goingÌto€offer€their€services€to,€and€most€--€many€businessesÌdecline€to€offer€services€because€they€don't€know€thatÌthey€are€going€to€get€paid€for€those€services.Ì€€€€€€€€I€think€this€industry€is€rather€unique€as€oneÌthat€is€simply€willing€to€offer€its€services€withoutÌundertaking€any€particular€examination€of€who€it'sÌexpecting€payment€from.Ì€€€€€€€€So,€I€think€those€are€sorts€of€issues€thatÌcertainly€as€state€attorneys€general€we€don't€haveÌaccess€to,€and€I€would€expect€that€the€industry€wouldÌhave€access€to€that€sort€of€information€that€wouldÌenable€policy€makers€to€address€in€a€reasonable€way€theÌproblem€of€chargebacks.Ì€€€€€€€€MS.€HARRINGTON:€€I€think€several€of€theÌquestions€you€raised,€Dave,€are€highlighted€in€theÌagenda€for€later€today,€and€I€appreciate€knowing€thatÌthey€are€foremost€on€your€mind,€as€well.ÌÐ	   	 ì,'2   Ð€€€€€€€€The€question€about€data€maintained€by€theÌindustry€I€think€is€an€important€one,€and€this€is€anÌopen€record€in€this€rulemaking,€and€we€would€encourageÌany€of€you€who€have€additional€data€on€the€chargebackÌissue,€by€application€type,€by€collection€method,€toÌsubmit€that€for€the€record.Ì€€€€€€€€Peter,€I€think€you're€next.Ì€€€€€€€€MR.€BRENNAN:€€Thank€you.€€This€is€PeterÌBrennan.Ì€€€€€€€€Tele-Publishing€has€prepared€in€writing€and€inÌdigital€form€some€case€studies,€because€we€felt€that€weÌhad€the€unique€ability€to€do€that.€€Our€services,€whichÌI€mentioned€are€personals€services,€which€in€the€UnitedÌStates€we€offer€to€about€600€newspapers.€€In€order€toÌmake€this€manageable,€I€took€seven€different€newspapersÌfrom€various€parts€of€the€country,€four€major€dailyÌnewspapers,€three€weeklies,€because€there€are€someÌverities€there.€€I€took€four€papers€that€had€experiencedÌa€very€high€level€of€chargebacks€and€three€papers€thatÌexperienced€what€we€consider€an€acceptable€level€ofÌchargebacks.Ì€€€€€€€€Historically,€our€chargebacks€have€run€in€the€4Ìto€5€percent€range.€€Lately€--€and€when€I€say€lately,€IÌmean€in€the€last€six€to€nine€months€--€those€chargebacksÌhave€risen€on€an€overall€basis€to€8€to€9€percent.€€AndÌÐ	   	 ì,'2   Ðthe€reason€for€those,€when€we€look€at€them,€there€areÌspecific€areas,€specific€problems,€specific€clients€thatÌwe€have,€for€example,€The€Tampa€Tribune,€where€theÌchargebacks€are€26€percent€sometimes,€where€theÌchargebacks€in€The€Memphis€Flyer,€which€is€a€weekly,€areÌ12€percent,€and€a€number€of€those.Ì€€€€€€€€And€so€what€I€am€able€to€provide€is€--€is€actualÌdata€right€down€to€the€call€records€from€your€analysis,Ìand€I€will€attempt€to€--€to€also€make€that€--€make€someÌassumptions€and€break€it€down€from€our€point€of€view,Ìbut€I€will€provide€you€with€the€raw€data€for€that.Ì€€€€€€€€MS.€HARRINGTON:€€That's€excellent,€Peter.Ì€€€€€€€€MR.€BRENNAN:€€What€I€wanted€to€say,€though,€asÌone€--€well,€the€other€important€thing€is€we€considerÌchargebacks€--€our€company€considers€chargebacks€moreÌthan€anything€else€a€measure€of€how€well€we€are€doingÌour€job.€€If€people€are€pleased€with€the€service€and€theÌcustomer€is€satisfied,€the€chargebacks€are€generallyÌlow.€€There€are€those€who€abuse,€and€they€--€and€thereÌwill€be.€€To€some€extent,€we€have€looked€at€that€as€aÌcost€of€doing€business,€all€things€being€equal.Ì€€€€€€€€The€other€thing€is€that€we€market€--€because€forÌour€services€we€provide€the€newspapers€in€this€instanceÌwith€camera-ready€artwork,€so€we€have€six€differentÌtracks€going€at€any€one€time.€€Essentially€the€sameÌÐ	   	 ì,'2   Ðmarketing€goes€all€across€the€country€to€any€of€ourÌoutlets.€€So,€we€are€unwilling€to€accept€that€a€consumerÌin€Florida,€for€example,€was€less€willing€to€understandÌthe€obligations€and€the€price€and€less€willing€to€payÌfor€the€service€than€a€consumer€in€New€York€or€aÌconsumer€in€some€other€part€of€the€country.Ì€€€€€€€€So,€we€are€left€with€the€conclusion,€based€onÌthat€and€on€other€factors,€that€the€problem€withÌchargebacks€is€primarily€a€problem€that€the€localÌexchange€carriers€are€too€cavalier€and€too€willing€toÌtreat€chargebacks,€treat€these€issues€on€a€timelyÌbasis.€€We€notice€chargebacks€coming€in€months€andÌmonths€and€months€late.€€We€notice€significant€varianceÌon€a€LEC-by-LEC€basis,€and€with€--€and€we€think€for€thatÌreason€that€--€that€we€need€--€we€need€better€control€ofÌthe€data€base,€which€we€will€talk€about€later,€andÌothers,€and€we€seek€the€Commission's€help€in€thatÌregard.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Peter.Ì€€€€€€€€Richard?Ì€€€€€€€€MR.€R.€GORDON:€€Yes,€first€and€foremost,€I€wouldÌlike€to€acknowledge€the€testimony€and€the€statementsÌmade€by€Southwestern€Bell,€because€the€clear€admissionÌthat€the€60-day€provision€is€only€a€guideline€in€theirÌperspective€is€I€think€part€of€the€salient€issue€here,ÌÐ	   	 ì,'2   Ðthe€fact€that€90€or€120€days€later,€if€the€consumerÌsays,€I€don't€want€to€pay€for€this,€they€are€still€goingÌto€bring€it€back€to€the€industry€is€based€on€myÌinterpretation€and€a€reading€of€the€Federal€Register€--Ìand€I€would€like€to€read€the€record€--€a€clearÌmisunderstanding€that€must€be€immediately€corrected.Ì€€€€€€€€I'm€on€page€387€of€the€Federal€Register€fromÌ1993.€€"Initiation€of€billing€review.€€A€customer€mayÌinitiate€a€billing€review€with€respect€to€a€telephoneÌbilled€purchase€by€providing€the€billing€entity€withÌnotice€of€a€billing€error€--"€important€words€"--€noÌlater€than€60€days€after€the€billing€entity€transmittedÌthe€first€billing€statement€that€contains€a€charge€forÌsuch€telephone-billed€purchase."Ì€€€€€€€€We€happen€to€be€privileged€to€have€Robin€Mahl€inÌthe€audience€here,€and€I€believe€that€if€you€would€like,Ìshe€could€comment€on€Congress'€intent€on€the€60-dayÌrule.€€I€don't€believe€that€it's€Congress'€intent€thatÌthat€be€a€soft€date€that€the€LEC€can€move€at€itsÌdiscretion€to€keep€good€consumer€relations.€€I€believeÌthat€this€is€a€firm,€established€policy€in€the€writtenÌrecord,€and€I€think€it€mirrors€the€intent€of€Congress.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Richard.Ì€€€€€€€€Albe€and€then€Walt€--€actually,€Mark?Ì€€€€€€€€MR.€HERTZENDORF:€€I€just€have€a€quick€questionÌÐ	   	 ì,'2   Ðfor€Peter€Brennan.€€I€was€just€wondering€with€regard€toÌthe€chargebacks,€are€a€lot€of€your€customers€repeatÌcustomers€that€are€requesting€chargebacks?€€Is€thatÌsomething€you€know€anything€about?Ì€€€€€€€€MR.€BRENNAN:€€We€know€that€customers€--Ìgenerally€our€customers€are€repeat€customers,€notÌusually€on€a€--€on€a€month-after-month-after-monthÌbasis.€€Usually€the€way€--€the€way€personals€work,€theyÌusually€they€find€some€dates€and€then€a€few€months€laterÌthey€are€back€again.€€So,€we€do€have€repeat€customers.Ì€€€€€€€€There€is€a€higher€--€and€I€can€--€I€will€provideÌyou€with€the€actual€statistics€about€this€when€I€canÌcheck,€but€there€is€a€higher€incidence€of€repeatÌcustomers€for€chargebacks.€€Chargebacks€generally€--€forÌexample,€I€have€--€I€have€a€report€of€the€same€userÌcharging€back€the€same€amount€for€three€consecutiveÌmonths,€which€is€--€which€is€rather€astounding,€on€anÌanecdotal€basis,€but€I€will€need€to€do€a€little€moreÌresearch€before€I€can€--Ì€€€€€€€€MS.€HARRINGTON:€€Actually,€I€overlooked€Jon€inÌthe€order€of€people€who€would€be€called€on,€so€Jon,Ìlet's€hear€from€you,€and€particularly,€there€is€aÌquestion€here€about€what€measures€carriers€and€providersÌcould€take€to€reduce€the€level€of€chargebacks,€and€I€--Ìif€we€could€get€some€discussion€on€that€question,€asÌÐ	   	 ì,'2   Ðwell,€it€would€be€helpful.Ì€€€€€€€€Jon?Ì€€€€€€€€MR.€SHAUB:€€I€was€just€going€to€share€someÌinformation,€and€again,€with€caveats,€this€is€notÌmathematical€precision€and€very€much€the€same€caveatsÌthat€MCI€mentioned.Ì€€€€€€€€Our€experience€with€chargebacks€from€variousÌbilling€channels,€primarily€various€LECs,€does€vary€byÌseveral€percentage€points€LEC€to€LEC,€is€generally€a€fewÌpercentage€points€--€I€would€characterize€in€the€20Ìpercent€range.€€That€applies€to€900€services€where€AT&TÌis€the€billing€entity€but€does€include€the€bad€debt€typeÌwrite-off€with€all€detail€when€handled€properly.€€So,€aÌslight€difference€in€percentage,€to€some€degree€anÌinclusion€that€was€not€in€Don's€data.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€Jon.Ì€€€€€€€€All€right,€Albe,€Walt€and€Kim,€in€that€order,Ìplease.Ì€€€€€€€€MR.€ANGEL:€€I€will€try€to€pick€up€some€looseÌends€in€terms€of€points€of€fact€that€have€been€requestedÌhere.Ì€€€€€€€€In€terms€of€industry€statistical€information,Ìthe€ISA€did€conduct€a€bit€of€market€research,€and€weÌhave€I€believe€appended€to€that€our€comments.€€What€itÌhelps€to€show€is€the€order€of€priority€in€terms€of€theÌÐ	   	 ì,'2   Ðchargebacks,€and€just€to€recount€that,€we€see€that€adultÌservices€and€psychic€services€are€up€towards€the€top€ofÌhigh€chargeback€ratios,€that€other€entertainmentÌservices€follow€that.€€Then€we€get€into€areas€of€voiceÌpersonals€and€at€the€bottom€would€be€applications€likeÌpolling€and€pure€information.Ì€€€€€€€€Now,€don't€read€too€much€into€various€factorsÌthat€have€been€identified€here,€because€although€priceÌis€a€determination,€you€really€have€to€look€to€theÌapplication.€€There€was€a€specific€question€as€toÌservices€that€are€high€priced€that€have€lowÌchargebacks.€€A€couple€that€are€worthy€of€considerationÌare€the€FCC€auction€line€where€industrial€players€areÌessentially€bidding€on€Spectrum€and€had€to€remain€on€theÌphone€for€a€long€time,€incur€very€large€charges,€theÌchargeback€ratios€are€very€low.Ì€€€€€€€€MR.€HERTZENDORF:€€The€FCC€auction?Ì€€€€€€€€MR.€ANGEL:€€Yeah.€€In€effect,€what€happened€wasÌFCC€was€conducting€an€auction€for€Spectrum.Ì€€€€€€€€MR.€HERTZENDORF:€€Oh,€okay.Ì€€€€€€€€MR.€ANGEL:€€And€people€could€participate€in€thatÌauction€by€monitoring€a€900€call.€€Our€company€providesÌservices€to€handicappers,€and€some€of€those€servicesÌmight€be€$50,€$75€a€call,€traditionally€very€lowÌchargebacks,€because€the€people€who€are€calling€perceiveÌÐ	   	 ì,'2   Ðvalue€and€don't€challenge€the€number.€€So,€you€have€onÌthe€other€end€of€the€spectrum€high-priced€services€thatÌare€low€chargebacks.Ì€€€€€€€€But€the€most€salient€point€that€I€want€to€makeÌis€that€the€industry€is€united€in€the€belief€thatÌchargebacks€as€a€whole€have€increased€significantly€overÌthe€last€two€years,€that€if€you€look€at€the€mean,€you'reÌgoing€to€see€it€creeping€up€for€every€category€and€thatÌthe€only€way€that€we€can€explain€that€is€to€say€thatÌthere€are€structural€factors€at€work.€€It's€not€theÌapplications€but€the€way€in€which€the€billing€insertÌadvisory€causes€consumers€to€essentially€question€andÌwithhold€payment,€the€way€in€which€the€local€exchangeÌcarriers€implement€their€billing€procedures,€and€what€weÌreally€want€here€is€a€way€of€tightening€up€thoseÌprocedures€in€order€that€we€can€regain€efficiency.Ì€€€€€€€€The€--Ì€€€€€€€€MS.€HARRINGTON:€€Albe,€do€you€mean€those€twoÌitems€in€the€order€that€you€listed€them?€€That€is€--Ì€€€€€€€€MR.€ANGEL:€€That's€a€very€broad€question,€I'llÌanswer€it.Ì€€€€€€€€The€billing€insert€is€really€the€first€line€ofÌdefense,€and€anyone€who's€going€to€question€a€charge€isÌgoing€to€look€to€that€first€to€determine€what€the€rulesÌof€the€road€are.ÌÐ	   	 ì,'2   Ð€€€€€€€€Now,€there€is€probably€going€to€be€some€veryÌspirited€debate€on€whether€the€local€exchange€carriersÌshould€accept,€you€know,€a€request€for€removal€ofÌcharges€after€60€days,€but€at€least€if€the€advisory€saidÌyou€must€bring€these€to€the€attention€of€the€localÌexchange€carrier€within€60€days,€the€vast€majority€ofÌconsumers€are€going€to€be€responsive€to€that€60-dayÌperiod,€irrespective€of€what€the€actual€treatment€isÌsubsequently.€€So,€you€know,€that's€a€really€importantÌsign€post€to€give€the€right€signal€as€to€timeliness.Ì€€€€€€€€Now,€on€the€issue€of€the€practices,€you€know,Ìthe€industry€has€been€groping€here€trying€to€pullÌtogether€information€that€would€show€the€experience€on€aÌLEC-by-LEC€basis.€€We€are€not€looking€to€point€fingersÌas€much€as€identify€practices€that€are€working€andÌidentify€parties€that€are€not€adhering€to€reasonableÌpractices,€and€we're€hoping€that€this€is€a€vehicle€forÌbringing€these€things€in€focus.Ì€€€€€€€€MS.€HARRINGTON:€€Okay,€quick€question,€Mark?Ì€€€€€€€€MR.€ANGEL:€€The€industry€average,€if€I€had€toÌsay€what€the€industry€average€is,€I€think€it's,€youÌknow,€15€to€20€percent€is€a€realistic€number€in€the€900Ìindustry.€€If€you€look€to€the€non-900€forms€of€access,Ìwhich€are€typically€billed€through€clearinghouses€butÌadministered€by€local€exchange€carriers,€the€rates€areÌÐ	   	 ì,'2   Ðhigher,€probably€25€to€35€percent,€and€it€would€still€beÌin€the€same€order€that€we've€previously€published.Ì€€€€€€€€MS.€HARRINGTON:€€Quick€question?Ì€€€€€€€€MR.€HERTZENDORF:€€Is€Southwest€Bell€going€to€goÌnext€or€is€someone€ahead€of€them?Ì€€€€€€€€MS.€HARRINGTON:€€Walt€and€then€Southwest€Bell.Ì€€€€€€€€MR.€HERTZENDORF:€€Let€me€go€in€between€them,Ìthen.Ì€€€€€€€€MS.€HARRINGTON:€€Okay,€Walt?Ì€€€€€€€€MR.€STEIMEL:€€I€would€like€to€concur€with€theÌlast€gentleman's€remarks,€that€in€our€experience,€toÌsome€degree,€there€has€been€a€lot€of€interpretation€ofÌpolicy€that€the€LECs€are€completely€different€dependingÌon€who€you€are€talking€to,€but€essentially€the€LEC'sÌpolicy€encourages€chargebacks,€and€a€lot€of€consumersÌlook€at€their€bill€and€say€this€is€basically€a€freeÌservice.€€I€can€basically€say€I€am€not€going€to€pay€it,Ìthe€LEC€charges€back,€and€that's€it,€and€while€weÌbelieve€that€the€provider€should€absorb€that€risk,€andÌPilgrim€certainly€when€it€sends€a€bill€out€and€it€gets€aÌchargeback,€it€absorbs€the€risks€of€those€chargebacks,Ìthe€mechanism€it€seems€like€right€now€encouragesÌconsumers€to€charge€back€even€when€we€have€had€evidenceÌof€fraud.Ì€€€€€€€€We€have€had€difficulty€getting€the€LECs€to€goÌÐ	   	 ì,'2   Ðalong€with€this€and€continuing€to€sustain€billings€whenÌwe€can€demonstrate€fraud€exists.€€In€the€most€extremeÌinstances,€we€had€a€district€manager€at€one€of€the€LECsÌthat€was€actively€engaged€in€a€fraud.€€We€eventuallyÌturned€him€in€to€the€Pennsylvania€police,€he€wasÌarrested€and€convicted€for€stealing€service.€€I€believeÌhe€was€convicted.€€I€know€he€was€arrested€and€there€wasÌa€trial.Ì€€€€€€€€And€in€the€other€instance,€we€have€a€number€ofÌinstances€in€which€customers€will€change€their€phoneÌnumbers€or€engage€in€other€dialing€platforms€to€get€backÌto€an€information€service€to€evade€blocks.€€I€mean,€thisÌis€not€uniform,€and€there€is€certainly€many€instances€inÌwhich€consumers€have€legitimate€chargeback€requests,€butÌit€seems€that€right€now€the€system€may€be€a€littleÌbiased€to€encourage€chargebacks.Ì€€€€€€€€One€question€I€had€for€everyone€generally€isÌwhether€or€not€presubscriptions€are€actually€used€inÌconjunction€with€LEC€billing€anymore.€€It€has€been€ourÌexperience€that€LECs€do€not€bill€for€writtenÌpresubscription€agreements,€so€that's€kind€of€aÌnullity.€€Those€two€together€are€kind€of€a€nullity.Ì€€€€€€€€Finally,€as€far€as€measures€to€lower€the€levelÌof€chargebacks,€if€--€we€believe€that€if€900€numberÌblocking€were€made€available€to€all€of€the€interexchangeÌÐ	   	 ì,'2   Ðcarriers€and€all€the€information€providers€and€the€FTCÌand€FCC€could€require€the€use,€could€require€the€pollingÌof€900€number€blocks,€as€well€as€LIDB,€that€would€helpÌlower€chargeback€rates€substantially.€€It€would€make€itÌmuch€easier€to€identify€people€that€more€than€likelyÌwould€charge€back€from€going€to€any€kind€of€informationÌservice€platform.Ì€€€€€€€€MS.€HARRINGTON:€€You€are€talking€about€blockingÌgoing€the€other€way?Ì€€€€€€€€MR.€STEIMEL:€€Right,€well,€just€making€thatÌinformation€available,€because€right€now€it's€impossibleÌto€know€if€someone€has€a€900€number€block.Ì€€€€€€€€MS.€HARRINGTON:€€Right.Ì€€€€€€€€MR.€STEIMEL:€€The€only€way€you€can€know€is€if€aÌcall€is€coming€from€the€customer€through€the€CO€and€itÌblocks€in€the€switch,€but€there€is€no€way€for€anyone€toÌlook€down€at€the€switch€and€see€if€there€is€a€900€numberÌblock,€and€sometimes€there€are€defects€in€the€system€andÌit€lets€calls€go€through.€€Technologically,€there€are€aÌnumber€of€things€that€can€go€wrong.Ì€€€€€€€€We€think€the€system€would€work€much€better€ifÌinterexchange€carriers€and€service€providers€were€ableÌto€look€down€and€see€a€900€block€just€like€we€could€lookÌacross€and€see€in€LIDB€a€collect-calling€block€or€aÌthird-number-billing€block€or€get€information€that€--ÌÐ	   	 ì,'2   Ðinformation€data.€€There€is€a€lot€of€information€we€canÌget,€but€we€cannot€get€900€blocking€information.Ì€€€€€€€€MS.€HARRINGTON:€€We€have€got€a€question€fromÌAllen€and€then€one€from€Marianne,€and€I€will€get€back€toÌyou,€don't€worry,€Mark.Ì€€€€€€€€MR.€HILE:€€My€question€is€for€you,€Albe.€€YouÌsaid€there€are€two€different€levels€of€chargebacks,€andÌI€--€one€is€15€to€20€percent€and€the€other€is€25€to€35Ìfor€calls€that€go€through€clearinghouses?Ì€€€€€€€€MR.€ANGEL:€€Yeah,€let€--Ì€€€€€€€€MR.€HILE:€€What€accounts€for€the€higher€numberÌin€the€latter?Ì€€€€€€€€MR.€ANGEL:€€You€have€heard€the€carriers€identifyÌthose€services€that€they€will€bill€for€and€those€thatÌthey€will€not€bill€for,€and€the€carriers€that€I'mÌreferring€specifically€to€are€AT&T€and€MCI,€which€haveÌthe€lion's€share€of€900€numbers€that€are€used€for€pureÌinformation,€voice€personals€and€psychic€lines,€forÌexample.Ì€€€€€€€€At€the€same€time,€there€are€clearinghouses,Ìthird-party€billers,€that€aggregate€billing€andÌcollection€agreements€with€local€exchange€carriers.ÌIntegretel,€OAN,€ITA€are€some€believers€in€thatÌindustry.Ì€€€€€€€€Now,€if€someone€wants€to€subscribe€to€a€900ÌÐ	   	 ì,'2   Ðservice€from€a€carrier,€the€carriers€are€obligated€toÌprovide€that€900€service,€but€if€it's€an€area,€such€asÌadult€services,€they€typically€will€not€provide€billing,Ìand€the€person€who€is€providing€the€adult€900€serviceÌwill€turn€to€a€third-party€biller€who€has€all€theseÌbilling€and€collection€agreements€in€place,€and€theÌexperience€that€they€are€seeing€is€that€their€chargebackÌratio€is€higher€than€that€of€the€carriers,€and€it's,€youÌknow,€in€some€instances€can€be€as€high€as€50€percent,Ìand€that's€a€function€of€the€application,€it's€aÌfunction€of€the€service,€it's€a€function€of€the€LECÌbillings€and€collections€practices,€and€it€may€be€aÌfunction€of€the€consumer,€who€is€very€familiar€with€allÌof€the€above€and€chooses€to€consume€the€services€with€noÌintention€of€paying€for€them.Ì€€€€€€€€MR.€HILE:€€Okay.Ì€€€€€€€€MS.€HARRINGTON:€€Marianne,€then€Mark,€then€Kim.Ì€€€€€€€€MS.€SCHWANKE:€€I€have€a€question€for€Kim.€€ToÌfollow€up€on€what€Walt€said€about€the€900€blockingÌinformation,€can€you€address€what€the€reasons€are€whyÌthe€900€blocking€information€isn't€currently€availableÌand€are€there€ways€that€it€could€be€made€available€inÌthe€future?Ì€€€€€€€€MS.€WILLIAMS:€€Yes,€I€think€this€has€beenÌsomething€that€a€lot€of€people€have€asked€for€over€theÌÐ	   	 ì,'2   Ðyears.€€Number€one,€I€think€to€just€give€a€wholesaleÌlist€of€customers€who€are€900€blocked€is€a€concern€fromÌa€privacy€perspective,€a€CPNI€issue.€€So,€we€have€alwaysÌbeen€against€just€making€a€list€available€of€everyÌcustomer€who€has€900€blocking.€€That's€not€to€say€that€IÌdon't€think€it€couldn't€be€provided€on€LIDB.€€I€mean,ÌLIDB€does€have€information€on€other€types€of€blocking.Ì€€€€€€€€However,€LIDB€is€an€operator€services€callÌverification€system,€which€900€--€you€know,€900€blockingÌis€not€an€operator-handled€call.€€It's€a€direct-dialedÌcall€that€can't€be€made€or€shouldn't€be€able€to€be€madeÌif€the€customer€has€900€blocking.€€So,€it's€customers€orÌcarriers€who€are€providing€services€on€platforms€otherÌthan€900€who€I€think€want€the€900€blocking€lists€so€thatÌthey€can€block€their€customers€when€a€customer€hasÌchosen€900€blocking.Ì€€€€€€€€MS.€HARRINGTON:€€Time.€€Is€that€a€safeÌassumption?€€Is€it€--Ì€€€€€€€€MR.€ANGEL:€€No.Ì€€€€€€€€MS.€HARRINGTON:€€Is€it€customers€who€want€to€useÌthis€information€for€different€platforms?€€Okay,€so€weÌjust€--€just€to€clarify€for€the€record,€there€is€someÌdispute€among€the€participants€about€that€assumption.Ì€€€€€€€€MS.€WILLIAMS:€€Okay,€well€--€and€I€guess€myÌquestion€to€those€people€would€be€if€the€customer€hasÌÐ	   	 ì,'2   Ð900€blocking€and€can't€make€a€900€call,€that€stops€theÌproblem€right€there.€€I€don't€--€I€don't€know€why€a€900Ìprovider€needs€to€know€that€that€customer€isÌ900-blocked.€€The€call€is€stopped€at€the€switch.Ì€€€€€€€€MR.€HERTZENDORF:€€Perhaps€I€misunderstood,€but€IÌwas€--€from€the€comments€I€got€the€impression€it€wasÌthat€they€wanted€to€use€the€900€number€blocking€to€maybeÌblock€international€calls€or€other€dialing€prefixes.€€IsÌthat€correct?Ì€€€€€€€€MS.€HARRINGTON:€€Well,€let€me€go€to€the€peopleÌwho€are€saying€no.€€Albe€--Ì€€€€€€€€MR.€HERTZENDORF:€€But€that€wasn't€my€wholeÌquestion,€and€maybe€I€should€go€on€with€the€otherÌquestion€before€it€gets€--Ì€€€€€€€€MS.€HARRINGTON:€€No,€just€a€minute,€Mark,€and€weÌwill€get€back€to€you.Ì€€€€€€€€Albe,€would€you€quickly€say€what€need€--€wouldÌyou€respond€to€Kim's€question,€please.Ì€€€€€€€€MR.€ANGEL:€€The€point€I€would€like€to€make€isÌthis:€€That€the€people€that€are€in€the€business€ofÌbilling€for€--€whether€it's€information€services€orÌoperator€services€are€typically€the€same€people.€€TheÌthird-party€billers,€the€clearinghouses€--€the€billingÌclearinghouses€already€have€access€to€line€data€bases€inÌconnection€with€operator€services,€but€they€may€want€toÌÐ	   	 ì,'2   Ðhave€access€to€those€same€data€bases€vis-a-visÌinformation€service€calls,€and€there's€no€reason€thatÌthese€billing€entities€shouldn't€be€provided€thatÌinformation.Ì€€€€€€€€MS.€HARRINGTON:€€That's€not€an€answer€to€theÌquestion.€€The€question€is€what€use€could€a€billingÌentity€make€of€information€about€who's€got€900€numberÌblocking€if€people€can't€make€900€number€calls,€they€areÌblocked.€€What€do€you€need€that€information€for?Ì€€€€€€€€MR.€ANGEL:€€Okay,€the€example€that€I€would€giveÌis€of€a€service€provider€who€offers€its€service€via€800Ìaccess€arrangement€and€intends€to€bill€either€to€aÌcredit€card€or€through€the€telephone€invoice€and€wantsÌto€have€a€further€indicator€as€to€whether€that€householdÌhas€chosen€900€blocking€as€a€factor€to€consider€whetherÌor€not€they€are€going€to€offer€service.Ì€€€€€€€€MS.€HARRINGTON:€€What€about€the€privacy€interestÌthat€the€consumer€has€that€Kim€talks€about?€€What's€yourÌanswer€to€that?Ì€€€€€€€€MR.€ANGEL:€€Okay,€the€privacy€issue€is€easilyÌaddressed.€€The€providers€of€the€service€are€not€goingÌto€be€breaching€any€consumers'€right€to€privacy,€nor€areÌthey€going€to€be€making€information€available€to€theÌpublic€or€to€others€that€would€compromise€thatÌconsumer's€privacy.€€The€wall€of€defense€that's€been€putÌÐ	   	 ì,'2   Ðup€here€by€the€local€exchange€carriers€and€to€a€certainÌextent€the€carriers€is€based€on€suspicion€and€concernÌrather€than€facts.€€They€are€concerned€that€consumersÌare€going€to€be€compromised.€€At€the€same€time,€theÌproviders€of€service€are€fully€well€aware€of€what€theÌprivacy€standards€are€and€will€use€the€information€inÌorder€to€limit€abuse.Ì€€€€€€€€MS.€HARRINGTON:€€Well,€let€me€just€flip€that€andÌsay€as€a€consumer€who€chooses€900€number€blocking,€thatÌchoice€is€not€made€with€the€intent€that€the€informationÌwould€be€used€to€limit€choice.Ì€€€€€€€€MR.€ANGEL:€€I'm€sorry,€say€it€again.Ì€€€€€€€€MS.€HARRINGTON:€€I€am€saying€if€I€make€a€choiceÌas€a€consumer€to€have€900€number€blocking€on€my€phone,ÌI'm€not€intending€that€that€will€be€further€used€toÌlimit€my€choice€when€I€go€into€the€marketplace€to€obtainÌadditional€services.Ì€€€€€€€€MR.€ANGEL:€€That's€a€legitimate€point.€€YouÌknow,€the€problem€is€with€the€extent€of€the€data€base,Ìall€right?€€Let's€say€you're€a€hospital€and€you'veÌdirected€your€telecommunications€manager€to€instituteÌevery€known€block€in€order€to€avoid€charges€back€to€yourÌlines.€€So,€you€institute€this€900€block,€and€all€of€aÌsudden€you€see€800€access€calls€being€billed€to€yourÌaccount,€and€you€inquire,€what€can€I€do€to€stop€theseÌÐ	   	 ì,'2   Ðcalls?Ì€€€€€€€€Well,€that's€part€of€why€we're€here,€and€anÌentity€that€might€be€billing€to€such€an€entity€wouldÌwant€to€know,€oh,€well,€this€is€a€hospital.€€I€wish€IÌhad€some€data€base€that€would€enable€me€to€know€thatÌthat's€a€hospital€before€I€billed€to€that€hospital.Ì€€€€€€€€MS.€WILLIAMS:€€Eileen,€can€I€interject?€€If€theyÌhad€a€valid€presubscription€agreement€with€the€validÌbilling€party,€that€call€would€never€go€through,€andÌthat's€been€my€one€point.€€I€don't€say€giving€out€900Ìinformation€is€bad€as€far€as€on€LIDB€goes,€but€if€youÌhad€a€valid€presubscription€arrangement,€if€your€serviceÌwas€really€provided€over€900,€where€it€should€be,€itÌwouldn't€be€a€problem.Ì€€€€€€€€MS.€HARRINGTON:€€Okay,€Mark?Ì€€€€€€€€MR.€HERTZENDORF:€€Yes,€okay.€€There's€been€a€lotÌof€complaints€about€the€LECs'€billing€practices,€and€I'mÌjust€sort€of€wondering,€how€are€these€determined?€€AreÌthey€unilaterally€determined€by€each€LEC€or€are€they€theÌresult€of€contract€negotiations,€and€which€parties€areÌwe€dealing€with?€€I€would€like€to€hear€a€little€bit€moreÌabout€these€billing€and€collection€--€what€is€it€--Ìbilling€and€collection€--Ì€€€€€€€€MS.€WILLIAMS:€€Contracts,€right.€€I€can€addressÌour€contracts,€but€I€didn't€want€to€--€are€there€otherÌÐ	   	 ì,'2   Ðcomments€on€the€900?Ì€€€€€€€€MS.€HARRINGTON:€€Let's€keep€Mark's€question€inÌmind,€and€we€have€got€some€people€waiting€to€answerÌearlier€questions,€I€think.Ì€€€€€€€€MS.€WILLIAMS:€€That's€what€I€was€wondering,€ifÌthey€were€getting€at€the€900€blocking.Ì€€€€€€€€MS.€HARRINGTON:€€We€are€going€to€come€back€toÌyou€on€that,€Kim,€but€Don,€can€we€hear€from€you,Ìplease?Ì€€€€€€€€MR.€KLUG:€€I€just€wanted€to€make€a€comment€onÌKim's€statement€about€concerns€about€privacy€making€900Ìblock€information€available€to€the€industry.€€I€thinkÌthere€is€an€analogy€here€with€the€Direct€MailÌAssociation€in€terms€of€blocks.€€I'm€either€receivingÌjunk€mail€or€receiving€unsolicited€phone€calls,€which€IÌhappen€to€get€a€lot€of,€and€I€think€the€whole€premise€ofÌthat€system€is€that€that€information€is€shared€amongÌpeople€in€the€industry€so€they€can€take€advantage€ofÌit.Ì€€€€€€€€If€900€blocks€are€made€available€to€theÌinformation€providers,€I€think€they€could€use€thatÌinformation€in€terms€of€marketing,€looking€at€certainÌareas€that€perhaps€had€a€high€incidence€of€blocking.ÌYou€mentioned€a€30€percent€in€Southwest€Bell€territory.ÌIt€may€be€higher€in€other€particular€geographic€areas,ÌÐ	   	 ì,'2   Ðand€information€providers€could€take€advantage€of€thatÌto€tailor€their€programs,€to€not€market€to€people€whoÌdidn't€want€to€take€advantage€of€the€service.Ì€€€€€€€€I€think€the€other€thing€that's€worth€mentioningÌis€there€could€be€a€consent€with€that€block€and€askingÌconsumers€if€that€could€be€shared€with€people.Ì€€€€€€€€MS.€HARRINGTON:€€And€Jill?Ì€€€€€€€€MS.€SANDFORD:€€Yes,€hi,€Jill€Sandford€from€theÌNew€York€attorney€general's€Office.Ì€€€€€€€€On€this€issue€of€blocking,€one€thing€that€comesÌto€mind€is€an€issue€of€phantom€billing€of€900€numberÌcalls,€and€it€appears€though€a€consumer€can€block€anÌactual€call€at€the€LEC€level,€is€there€any€blocking€fromÌa€900€number€call€appearing€on€a€consumer's€phone€ball?ÌBecause€we€receive€complaints€from€consumers€who€sayÌI've€done€everything,€I€put€the€block€on€my€call,€butÌyet€I'm€still€being€billed.Ì€€€€€€€€MS.€HARRINGTON:€€Jill,€we€have€got€a€sectionÌthis€afternoon€that's€going€to€cover€that€issue,€ifÌthat's€your€--€your€question€now.€€Could€--Ì€€€€€€€€MS.€SANDFORD:€€It€is.Ì€€€€€€€€MS.€HARRINGTON:€€Could€we€defer€that€for€thisÌafternoon?Ì€€€€€€€€MS.€SANDFORD:€€Sure.Ì€€€€€€€€MS.€HARRINGTON:€€Thank€you,€but€we€will€beÌÐ	   	 ì,'2   Ðdiscussing€that.Ì€€€€€€€€Richard?Ì€€€€€€€€MR.€R.€GORDON:€€Yes,€I€would€like€to€go€back€toÌone€of€the€opening€comments€here,€which€I€think€isÌexactly€on€point,€and€that's€from€the€attorney€general'sÌoffice€that€Dave€made.Ì€€€€€€€€You€suggested€that€it€was€important€that€theÌindustry€know€its€customer,€and€I€believe€that€that€isÌdead€on,€and€what€we're€talking€about€here€is€the€factÌthat€there€is€a€tremendous€amount€of€informationÌavailable€to€the€LECs€and€to€the€phone€companies€whoÌextend€credit€to€consumers,€and€because€they€extendÌcredit,€they€are€doing€so€based€on€the€information€thatÌthey€have,€and€when€the€consumer€says,€I€don't€want€toÌpay€the€bill,€they€have€a€right,€under€both€state€andÌfederal€law,€to€collect€on€that€debt.€€This€is€aÌcommercial€transaction.Ì€€€€€€€€What€we€have€here€is€a€problem€where€the€LECsÌare€not€downstreaming€sufficient€information€--€and€IÌagree€with€you€100€percent€on€the€--€there€has€to€be€aÌprotection€of€privacy,€but€as€an€example,€is€it€anÌinvasion€of€privacy€to€tell€someone€who's€going€to€sellÌsomething€on€the€telephone€in€an€instant€response€modeÌwhere€they€can't€check€to€see€anything€more€about€theÌcustomer€how€long€have€they€had€that€phone€number?ÌÐ	   	 ì,'2   Ð€€€€€€€€Is€it€an€invasion€of€privacy€to€put€a€dataÌpacket€in€the€record€that€says€this€phone€went€intoÌservice€yesterday€or€this€phone€has€been€in€service€forÌthree€years,€because€when€you€talk€about€knowing€yourÌcustomer,€which€we€again€support€and€encourage,€if€weÌknow€this€phone€number€has€been€around€as€an€industryÌfor€three€or€four€years,€we're€going€to€give€a€muchÌhigher€rating€in€our€realtime€risk€management€systems,Ìbecause€it€hasn't€been€turned€off.Ì€€€€€€€€One€of€the€problems€that€we€have€is€thatÌconsumers€know€what's€going€on.€€The€phrase€that€I€likeÌto€say€is€the€educated€consumer€is€our€most€dangerousÌenemy,€because€they€will€go€and€run€up€$500,€$1,000,Ì$2,000€worth€of€charges€and€then€call€the€phone€companyÌand€say,€I'm€getting€a€lot€of€annoying€phone€calls.€€TheÌattorney€generals€say€if€you€get€annoying€phone€calls,Ìyou€have€to€change€my€phone€number,€and€guess€what,€weÌget€the€chance€to€let€them€steal€thousands€and€thousandsÌof€dollars€of€services€again.Ì€€€€€€€€MS.€HARRINGTON:€€Richard,€let€me€make€anÌobservation,€that€if€you€analogize€what€the€providersÌare€doing€here€as€extending€credit€to€the€consumer€forÌinstantaneous€purchase€and€then€state€a€wish€to€haveÌadequate€information€that€may€be€available€out€thereÌconsolidated€so€that€the€providers€who€are€makingÌÐ	   	 ì,'2   Ðdecisions€or€who€are€extending€credit€can€make€informedÌdecisions€essentially€about€the€creditworthiness€of€theÌcaller,€I€would€just€point€to€the€very€careful€regimenÌof€regulation€that€exists€in€connection€with€the€use€ofÌconsumer€payment€information€and€other€relatedÌinformation€in€making€determinations€aboutÌcreditworthiness€under€the€Fair€Credit€Reporting€Act.Ì€€€€€€€€And€so€if€you€are€suggesting€that€thisÌinformation€about€who€has€blocking€service€might€be€inÌsome€measure€a€proxy€for€whether€a€consumer€ought€to€beÌdeemed€creditworthy€to€participate€in€this€kind€ofÌinstantaneous€grant€of€credit€and€purchase€situation,Ìthen€I'd€like€to€hear€you€all€address€the€question€ofÌwhat€kinds€of€protections€ought€to€exist€in€terms€ofÌnotice€to€the€consumer,€opportunity€for€the€consumer€toÌreview€the€record€that€the€credit€grantor€has€availableÌto€it€in€making€its€determinations€of€creditworthiness;Ìnotice€where€a€decision€has€been€made€not€to€provideÌaccess€to€the€consumer€to€that€system€of€credit€in€theÌform€of€referring€them€to€the€source€of€information;€andÌopportunity€for€the€consumer€to€correct€incorrectÌinformation€in€those€data€bases.Ì€€€€€€€€I€think€that's€--€I€think€from€our€standpoint,Ìif€you€are€going€to€come€at€this€that€way,€then€it€wouldÌbe€very€difficult€for€the€FTC€staff€to€distinguishÌÐ	   	 ì,'2   Ðbetween€this€situation€and€the€more€conventional€creditÌsituation€and€the€protections€that€consumers€receive.Ì€€€€€€€€MR.€R.€GORDON:€€The€answer€is€in€hand,€Eileen,Ìbecause€what€we€are€talking€about€is€we€are€talkingÌabout€immediate€and€instantaneous€access€versus€divertedÌaccess.€€In€other€words,€if€we€see€an€ANI€coming€inÌthat's€three€days€old€and€it's€the€fifth€call€in€theÌlast€hour€to€this€particular€information€provider€fromÌthat€ANI,€we€are€not€saying€deny€the€customer€service.ÌWe€are€saying€the€software€is€sophisticated€enough€toÌthen€interrupt€that€call,€put€a€live€customer€serviceÌperson€on,€and€ask€the€consumer,€are€you€aware€of€theÌfact€that€you€have€made€five€calls€in€the€last€one€hour,Ìand€get€a€recording€of€their€voice.€€This€is€all€doneÌrealtime.Ì€€€€€€€€These€are€the€types€of€things€that€the€industryÌis€doing€to€proactively€prevent€the€denial€of€credit€butÌalso€to€restrict€access€to€people€that€when€you€say€didÌyou€know€you€have€made€five€calls,€you€don't€hear€aÌresponse,€you€hear€a€click.€€The€problem€is€that€unlessÌwe€have€this€data€available,€it€becomes€aÌself-fulfilling€prophecy.Ì€€€€€€€€Don€made€a€very€excellent€point€about€theÌchargeback€rates€being€higher€as€a€result€of€the€cost€ofÌthe€call€being€higher.€€This€has€become€aÌÐ	   	 ì,'2   Ðself-fulfilling€prophecy.€€If€chargebacks€are€30€to€40Ìpercent,€those€costs€have€to€be€borne€back€by€theÌconsumers€who€are€actually€paying€for€these€services.ÌSo,€rates€of€$2€a€minute,€which€were€commonplace€in€theÌentertainment€industry€three€years€ago,€now,€by€default,Ìare€$3.50€to€$4€a€minute,€because€the€chargebacks€are€soÌhigh.Ì€€€€€€€€So,€consequently,€what€happens€is€the€propensityÌto€charge€back€increases,€because€the€dollar€value€ofÌthe€call€increases€so€dramatically.€€Again,€I€want€to€goÌback€and€compliment€the€attorney€generals€forÌrecognizing€how€important€it€is€that€we€as€sellers€ofÌservices€have€a€right€to€know€who€we€do€business€with.ÌThat's€the€key€here,€and€the€LECs€are€the€ones€thatÌcontrol€this€data.Ì€€€€€€€€I€believe€the€industry€at€large€would€love€toÌget€away€from€LEC€billing€if€they€could€get€all€theÌinformation€necessary€from€the€LECs€and€bill€this€as€aÌcommercial€contract.€€That's€something€that€we€wouldÌlove€to€have,€but€we€don't€have€all€the€access€that€weÌneed.€€We€don't€have€all€the€data.€€It's€there,€but€it'sÌ--€it's€diverse,€and€it's€not€available€to€us.Ì€€€€€€€€MS.€HARRINGTON:€€Okay,€we€are€going€to€hear€fromÌAlan.Ì€€€€€€€€MR.€TAYLOR:€€Thank€you.ÌÐ	   	 ì,'2   Ð€€€€€€€€I€want€to€go€back€just€briefly€to€the€dialogueÌabout€the€--€the€LIDB€billing€system.€€I€certainlyÌunderstand€Kim's€comments€about€why€you€need€to€knowÌthis€information€if€you€are€using€the€900€code.Ì€€€€€€€€I€guess€I€want€to€sort€of€support€theÌinformation€industry's€position,€however,€if€theÌdifferent€service€access€codes€are€going€to€continue€toÌbe€allowed€to€be€used,€then€I€think€the€LIDB€system€isÌ--€it€would€be€beneficial€for€these€folks€to€haveÌaccess€to€it,€and€I€think€the€LIDB€system€is€where€theÌbilling€block€option€could€be€made€apparent€to€theÌindustry€so€that€those€folks€who€say€in€advance€we€don'tÌwant€services€from€anyone€else,€that€information€couldÌbe€made€available€to€them€through€this€LIDB€system.Ì€€€€€€€€MR.€R.€GORDON:€€If€I€may,€just€--Ì€€€€€€€€MS.€HARRINGTON:€€No,€just€one€second.€€We€areÌgoing€to€hear€from€Susan,€we€are€going€to€have€aÌquestion€from€Allen.Ì€€€€€€€€MS.€GRANT:€€I'm€wondering€--€sorry,€I'mÌwondering€if€another€approach€to€this€whole€concern,Ìrather€than€creating€essentially€a€black€list€ofÌconsumers,€would€be€to€use€the€wealth€of€demographic€andÌmarketing€information€that's€out€there€to€target-marketÌyour€services€to€particular€consumers€who€you€thinkÌwould€be€most€interested€in€them€and€invite€them€toÌÐ	   	 ì,'2   Ðsubscribe€to€participate€in€them.Ì€€€€€€€€MS.€HARRINGTON:€€Allen?Ì€€€€€€€€MR.€HILE:€€My€question€is€a€bit€related€to€that,Ìthe€issue€of€targeting.€€What€would€prevent,€if€a€dataÌbase€were€available€that€showed€everyone€with€900€numberÌblocking,€what€would€prevent€someone€from€flipping€thatÌaround€and€targeting€those€folks€for€international€callsÌwhere€they€don't€enjoy€the€protections€of€having€the€900Ìnumber€blocking?Ì€€€€€€€€In€other€words,€using€it€for€exactly€theÌopposite€purpose€that€you're€talking€about.€€Can€anyoneÌrespond€to€that?Ì€€€€€€€€MS.€HARRINGTON:€€I€would€like€to€hear€--€I€haveÌgot€an€order€here,€but€who€has€responses€to€either€ofÌthese€last€two€questions?Ì€€€€€€€€MR.€R.€GORDON:€€I€have€a€response€to€the€blackÌlist.€€We€are€not€talking€about€a€black€list.€€WhatÌwe're€talking€about€is€an€informed€list.Ì€€€€€€€€MS.€HARRINGTON:€€Okay.Ì€€€€€€€€MR.€R.€GORDON:€€Again,€I€want€to€go€back€andÌsupport€the€attorney€general€position.€€Know€yourÌcustomer.Ì€€€€€€€€MS.€HARRINGTON:€€Richard,€I€think€you€areÌpressing€your€luck€here.Ì€€€€€€€€The€answers€to€these€questions,€Walt?ÌÐ	   	 ì,'2   Ð€€€€€€€€MR.€STEIMEL:€€Yeah,€I€think€it€would€beÌvirtually€impossible,€if€900€were€loaded€in€the€LIDB,€itÌwould€be€virtually€impossible€for€somebody€in€theÌindustry€to€develop€any€kind€of€list€they€can€use€forÌmarketing,€black€listing€or€otherwise.€€What€you€areÌtalking€about€is€a€call€comes€in,€you€take€the€ANI,€youÌbounce€it€off€LIDB€and€it€comes€back€and€lets€you€knowÌif€there€are€blocks.Ì€€€€€€€€You€would€have€to€build€a€computer€system€thatÌsequentially€went€through€every€phone€number€in€theÌcountry€on€a€regular€basis€and€collected€all€theÌblocking€information.€€This€isn't€something€you€dial€inÌand€you€look€up€and€say,€I€want€to€know€everybody€inÌSouthwestern€Bell€territory€that's€got€collect€callingÌblock€or€third-party€billing€block.€€The€other€blocksÌare€already€in€there.€€The€900€block€is€the€only€one€notÌin€the€system.Ì€€€€€€€€If€an€ANI€was€coming€in,€a€provider€looked€at€itÌand€said€this€call€is€going€to€a€service€that€we€thinkÌis€an€information€service€that€we€want€to€extend€TDDRAÌprotection€to,€then€they€would€just€like€to€see€if€theÌblock€was€there,€and€they€would€shunt€the€call€offÌsomewhere€else,€either€put€a€live€operator€on,€deny€theÌcall,€something€like€that,€but€it€would€be€almostÌimpossible€to€build€a€data€base.ÌÐ	   	 ì,'2   Ð€€€€€€€€So,€these€privacy€concerns€and€target€marketingÌand€building€data€bases€is€virtually€impossible€when€youÌare€talking€about€LIDB€look€up€on€an€instantaneous€callÌthat's€coming€in,€and€if€you€restrict€it€to€just€thatÌkind€of€look-up€in€the€data€base,€the€industry€will€notÌbe€able€to€abuse€that€and€there€is€no€real€privacyÌconcern€here.Ì€€€€€€€€MS.€HARRINGTON:€€Kim?Ì€€€€€€€€MS.€WILLIAMS:€€As€far€as€LIDB€goes,€myÌunderstanding€is€some€LECs€are€working€towards€a€serviceÌcalled€a€get-data€request,€and€if€you€get€down€to€shouldÌ900€blocking€be€out€there,€this€could€be€an€area€whereÌit€should€be€looked€at.€€I€think€Southwestern€Bell€isÌworking€on€it,€I€don't€know€if.Ì€€€€€€€€Every€LEC€is€going€to€add€it€to€their€LIDB€orÌnot,€but€you€would€be€able€to€do€a€check€on€LIDB€on€aÌphone€number,€and€it's€a€get€data,€what€does€thisÌcustomer€have,€you€know,€it€will€tell€you,€he€hasÌcollect€blocking,€third€number€blocking€and€certainÌtypes€of€other€things.€€He's€a€hotel€or€it's€aÌdormitory.€€Every€blocking€as€far€as€I€know€is€not€setÌup€to€be€out€there€yet.€€It's€not€--€but€I€think€if€900Ìblocking€were€going€to€be€there,€that€would€be€a€goodÌplace€for€it.€€You€are€talking€about,€though,€the€LECsÌspending€the€money€to€put€this€stuff€out€there.€€If€youÌÐ	   	 ì,'2   Ðall€want€to€come€up€with€a€pool€of€money€to€get€all€theÌLECs€to€do€this€and€to€get€this€--€the€information€outÌthere,€it€could€probably€happen.€€I€don't€think€there€isÌa€privacy€concern€if€it's€on€LIDB.Ì€€€€€€€€I'm€saying€there€is€a€privacy€concern€for€us€toÌgive€you€a€wholesale€list€of€every€customer€who€has€900Ìblocking.€€So,€I'm€not€saying€LIDB€is€--€that€there€isÌno€way€it€can€be€done,€although€I€don't€want€to€speakÌfor€every€LEC€in€that.€€It's€a€decision€that€has€to€beÌmade€by€the€LECs€and€whether€they€want€to€spend€theÌmoney€on€it,€but€what€I'm€saying€is€it's€not€a€cheapÌthing€to€do,€and€to€say€the€LECs€must€provide€it,€well,Ìwho€is€going€to€pay€for€it?Ì€€€€€€€€Am€I€going€to€be€able€to€address€some€of€thoseÌother€billing€issues?Ì€€€€€€€€MS.€HARRINGTON:€€Um-hum,€sure.Ì€€€€€€€€MS.€WILLIAMS:€€Okay.Ì€€€€€€€€MS.€HARRINGTON:€€Albe?Ì€€€€€€€€MR.€ANGEL:€€The€question€of€who€is€going€to€payÌfor€it,€we€have€got€a€fact€here€that€hundreds€ofÌmillions€of€dollars€are€being€charged€back.€€It's€aÌstructural€problem.€€The€LECs€are€in€a€position€whereÌthey€can€do€something€about€it,€but€they€are€passing€theÌpain€down€the€line.€€The€industry€is€asking€for€dataÌbases€that€are€responsive,€information€that€gives€them€aÌÐ	   	 ì,'2   Ðchoice€to€make€intelligent€decisions,€very€sensitive€toÌthe€issue€of€the€consumers'€choices€being€heard.Ì€€€€€€€€We€all€are€familiar€with€credit€card€systems€andÌthe€way€in€which€if€you're€somehow€spending€a€lot,€youÌmay€at€a€merchant€location€be€asked€to€talk€to€theÌcredit€card€company€and€say,€yes,€it's€me,€I'm€doingÌsome€holiday€shopping€now.€€We€want€the€same€sort€ofÌflexibility€in€the€audiotext€environment,€and€it's€notÌenough€to€say€who€is€going€to€pay€for€it.€€It's€enoughÌto€say€what€systems€are€necessary€and€how€do€weÌimplement€them€to€reduce€the€chargebacks.Ì€€€€€€€€MS.€HARRINGTON:€€Joel?Ì€€€€€€€€MR.€DICHTER:€€Just€responding€quickly€to€Alan,€IÌwant€to€agree€partly€with€--€altogether€with€what€WaltÌhad€to€say€and€add€to€that€a€little€bit,€that€the€wayÌLIDB€usually€works€is€through€a€separate€data€base,€andÌit€is€not€information€that€is€available€to€the€specificÌinformation€provider.€€There€is€this€company€calledÌCartel€who€maintains€a€data€base,€you€can€sendÌinformation€or€billing€tapes€to€them,€and€they€can€clearÌit€to€see€whether€their€customer€has€blockingÌinformation,€et€cetera.Ì€€€€€€€€So,€it's€something€that's€not€necessarily€in€theÌhands.€€You€also€can€put€protections€in€place.€€ForÌexample,€if€you€want€to€go€to€a€local€phone€company€andÌÐ	   	 ì,'2   Ðsay€I€would€like€to€know€the€billing€name€and€addressÌfor€a€certain€person€who€called,€I€think€there€is€aÌcontractual€provision€between€the€local€phone€companyÌand€the€person€who€gets€it€to€who€says€this€informationÌwill€only€be€used€for€billing€and€collection€purposes,Ìit€will€not€be€used€for€any€other€marketing€or€targetingÌinformation.Ì€€€€€€€€And€also,€Alan,€I€think€it's€right€that€peopleÌwant€to€target€a€customer€who€will€call€and€pay€forÌtheir€services,€and€that€--€and€that's€who€you'reÌtargeting€to,€not€to€someone€who€is€going€to€use€but€notÌpay€for€your€services.Ì€€€€€€€€MS.€HARRINGTON:€€Marianne€has€a€question.Ì€€€€€€€€MS.€SCHWANKE:€€What€conclusion€can€you€draw€fromÌthe€fact€that€somebody€has€a€900€block?€€If€you€had€thatÌinformation€available,€do€you€draw€the€conclusion€thatÌthey€don't€want€access€to€any€other€kinds€services€orÌthat€they€just€don't€want€someone€in€their€house€to€pickÌup€the€phone€and€incur€costs€but€that€they€might€wantÌaccess€to€other€services?€€So,€what€would€thatÌinformation€do€and€how€would€you€use€that?Ì€€€€€€€€MS.€HARRINGTON:€€Okay,€let's€--€Don,€you're€nextÌanyway.Ì€€€€€€€€MR.€KLUG:€€I€wanted€to€respond€to€Allen'sÌquestion,€also€to€Marianne's€question.€€In€terms€of€ifÌÐ	   	 ì,'2   Ð900€ANIs€were€made€available,€couldn't€marketers€thenÌuse€that€information€to€market€other€dialing€plans,€IÌthink€it€just€goes€back€to€Joel's€point,€is€if€peopleÌwere€blocking,€they€obviously€are€not€good€targetÌprospects,€so€why€try€and€market€to€them€with€anotherÌdialing€plan?Ì€€€€€€€€MR.€HILE:€€Well,€in€an€analogous€situation,€weÌsee€a€lot€of€folks€who€have€been€turned€down€for€creditÌtargeted€by€credit€scams.€€That's€exactly€the€sameÌthing,€and€you€have€--€you€have€a€big€gun€here.€€You€canÌdeny€service€if€consumers€fail€to€pay€theseÌinternational€charges.Ì€€€€€€€€MR.€KLUG:€€I'm€not€sure€I€buy€into€your€analogy,Ìbut€that's€all€right.Ì€€€€€€€€In€terms€of€Marianne's€question€--€sorry,€I€justÌforgot€it.Ì€€€€€€€€MS.€HARRINGTON:€€What€assumption€do€you€drawÌfrom€a€900€block?Ì€€€€€€€€MR.€KLUG:€€I€would€assume€that€people€do€notÌwant€unauthorized€access,€and€I€would€think€it'sÌprimarily€--€primarily€kids,€not€to€call€those€900Ìnumbers.€€I€would€think€that€adults€have€the,€you€know,Ìdon't€need€a€block,€because€they€can€choose€who€theyÌcall,€or€other€people€--€other€people€might€have€accessÌto€their€telephone.ÌÐ	   	 ì,'2   Ð€€€€€€€€MS.€HARRINGTON:€€Okay,€Adam,€a€question?Ì€€€€€€€€MR.€COHN:€€Relating€to€this€issue€of€what€does€aÌ900€number€block€mean,€I€would€like€to€put€out€theÌquestion€of€what€is€to€stop€industry€or€someone€fromÌadding€data€to€this€data€base€of€900€number€blocks€andÌbasically€asking€the€consumer€whether€they€want€--€whatÌtype€of€blocking€they€want,€and€right€now,€there€doesn'tÌseem€to€be€any€real€centralized€option€for€a€consumer€toÌsay€I€want€to€block€all€access€that€you€can€dialÌautomatically€without€a€credit€card.€€You€can€--€you€canÌblock€all€international€sometimes,€apparently.€€You€canÌblock€900€numbers€pretty€much€all€the€time€if€you€wantÌto,€but€why€not€ask€the€consumer€what€do€you€want€toÌblock€and€then€give€them€the€option€of€blocking,Ìalthough€I€don't€think€we€necessarily€have€to€determineÌwhat€to€do€with€900€if€the€consumer€is€given€the€optionÌof€determining€what€types€of€blocks€they€want.Ì€€€€€€€€MS.€HARRINGTON:€€Okay,€that's€another€questionÌout€there.Ì€€€€€€€€Linda,€you€have€had€--€do€you€have€anything€onÌthese€questions,€because€I€will€come€back€to€you.Ì€€€€€€€€MS.€GOLDSTEIN:€€I€don't€remember€which€questionÌit€is,€but€it's€responsive€to€some€question.Ì€€€€€€€€MS.€HARRINGTON:€€We€are€talking€about€dataÌbases,€blocking,€information€about€who€has€blocking,€howÌÐ	   	 ì,'2   Ðit's€used,€what€assumptions€are€drawn,€whether€it'sÌanalogous€to€a€credit€situation.€€That's€the€generalÌsubject€on€the€table€here.Ì€€€€€€€€MS.€GOLDSTEIN:€€Okay,€there€were€really€a€coupleÌof€points€floating€that€I€wanted€to€address.€€I€don'tÌreally€view€the€provision€of€this€information€asÌanalogous€really€to€sharing€credit€information.€€ItÌreally€is€more€analogous€to€determining€who€may€beÌinterested€in€the€service€and€who€is€likely€to€be€aÌresponsible€customer,€which€I€think€is€slightlyÌdifferent€--Ì€€€€€€€€MS.€HARRINGTON:€€Two€different€matters€there,ÌLinda,€who€is€interested€and€who€is€likely€to€beÌresponsible.€€One€is€consumer€opting€in,€the€other€isÌcreditor€making€judgment.Ì€€€€€€€€MS.€GOLDSTEIN:€€There€is€a€credit€implication€toÌit,€there€is€no€question€about€that,€because€of€theÌnature€of€the€service,€but€I€think€it€--€I€think€we€alsoÌhave€to€step€back€and€recognize€the€uniqueness€of€theÌservice,€that€this€is€still€the€only€type€of€serviceÌthat's€offered€instantaneously€and€for€which€theÌconsumer€can€obtain€the€full€benefit€of€the€service€andÌthen€determine€not€to€pay€with€no€obligation€really€toÌreturn.Ì€€€€€€€€So,€the€measures€that€we€then€take€to€protectÌÐ	   	 ì,'2   Ðthe€competing€interests€I€think€still€have€to€beÌmeasured€against€that€unique€aspect€of€this€service.€€IÌthink€the€industry's€need€to€have€this€information€isÌoutweighed€by€any€privacy€concerns.€€I€don't€frankly€seeÌa€privacy€concern€here.€€There€--€the€--€to€the€extentÌthat€the€information€may€be€made€available,€I€think€thatÌthere€are€ways€to€handle€any€privacy€concerns€that€mayÌarise.Ì€€€€€€€€One,€there€could€be€some€sort€of€notice€at€theÌtime€that€the€consumer€institutes€the€blocking,€simplyÌto€the€effect€that€this€information€will€be€madeÌavailable€on€a€limited€basis,€and€secondly,€there€couldÌbe€an€agreement€on€the€part€of€those€to€whom€theÌinformation€is€made€available€that€they€agree€not€to€useÌit€for€any€marketing€purposes.Ì€€€€€€€€I€think€everyone€around€this€table€has€made€itÌclear€that€there€really€isn't€an€intention€to€have€thisÌinformation€to€conduct€other€marketing€programs.€€IÌdon't€see€the€analogy€here€to€a€situation€where€thisÌinformation€is€going€to€be€then€given€to€someÌinformation€provider€who€is€going€to€target€thoseÌconsumers€who€have,€you€know,€a€bad€--€a€secured€creditÌcard€program.€€That€doesn't€seem€to€be€what's€drivingÌthe€information€here,€and€it€seems€to€me€that€it's€a€--Ìit's€a€relatively€simple€step€to€take.ÌÐ	   	 ì,'2   Ð€€€€€€€€Experience€in€other€industries€and€practices€hasÌshown€that€chargeback€rates€in€general€will€go€down€whenÌyour€marketing€efforts€are€targeted€at€those€consumersÌwho€have€indicated€a€desire€or€likelihood€they€want€toÌavail€themselves€of€those€services,€and€to€the€--€IÌthink€every€incremental€step€that€you€can€take€to€reduceÌchargebacks€will€help,€and€I€just€--€I€don't€see€theÌprivacy€issue€here€as€a€really€significant€issue,€and€IÌthink€it's€one€that€could€be€dealt€with€with€relativelyÌsimple€measures.Ì€€€€€€€€The€other€point€I€just€wanted€to€make,€and€thisÌgoes€back€to€a€point€that€you€really€raised€muchÌearlier,€and€I€don't€know€that€I€can€give€you€theÌspecifics€for€the€record,€but€I€will€go€back€and€see€ifÌwe€can,€because€I€think€it€would€be€instructive,€goesÌback€to€things€that€can€be€done€really€at€the€LEC€levelÌwhen€the€--€when€the€customer€first€calls€in,€and€we€doÌhave€one€member€that€actually€conducted€a€test€programÌwherein€specific€questions€were€asked,€not€in€anyÌthreatening€or€harassing€manner,€but€some€probingÌquestions€of€customers€that€called€in€to€deny€chargesÌabout€is€it€possible€that€your€husband€made€it€orÌadditional€questions€asked€that€made€the€consumerÌrespond€in€a€little€bit€more€detail€about€why€theÌcharges€were€being€denied.ÌÐ	   	 ì,'2   Ð€€€€€€€€And€the€results€of€that€test€program€were€ratherÌsignificant,€and€if€I€recall,€I€think€the€reduction€wasÌin€the€neighborhood€of€10€percent,€and€I€will€see€ifÌthat's€something€that€could€be€made€available€on€theÌrecord.€€At€this€point,€I€offer€it€simply€anecdotally,Ìbut€I€think,€you€know,€we€have€sort€of€gotten€off€trackÌof€additional€measures€that€could€be€taken€at€the€LECÌlevel€to€try€to€address€this€problem,€and€I€do€thinkÌthat's€still€another€area€of€inquiry.Ì€€€€€€€€MS.€HARRINGTON:€€Okay,€we€have€an€hour€and€tenÌminutes€left€in€this€session.€€We€have€not€explored€theÌinternational€dialing€pattern€issues€that€are€raised€inÌthe€agenda,€nor€have€we€discussed€changing€the€notice€toÌconsumers€in€the€statement,€and€those€are€very€importantÌissues€raised€by€commenters,€and€I€want€to€have€fullÌdiscussion.Ì€€€€€€€€I€am€going€to€ask€Richard€and€Albe,€do€you€haveÌanything€new€to€say€--€and€I€don't€mean€that€in€a€rudeÌway,€because€what€I€would€like€to€do€is€take€aÌten-minute€break,€we€said€there€would€be€a€break€aroundÌ11:00,€and€then€we€are€going€to€resume€at€11:30,€andÌjust€a€minute.Ì€€€€€€€€I€know€I€said€I€was€going€to€get€back€to€Kim,Ìbut€Kim,€is€there€--€do€you€have€anything€new€on€--Ì€€€€€€€€MS.€WILLIAMS:€€Well,€I€wanted€to€respond€to€someÌÐ	   	 ì,'2   Ðof€the€earlier€issues€about€billing€and€collections€thatÌcame€up€and€some€of€I€guess€the€accusations€against€theÌLEC€that€--Ì€€€€€€€€MS.€HARRINGTON:€€Can€I€give€you€five€minutesÌafter€the€break€to€do€that,€and€then€we€are€going€toÌmove€off€of€those€issues,€because€we€do€have€otherÌimportant€issues€that€we€want€to€cover€in€terms€ofÌindustry€perspective€on€the€chargeback€issue€in€thisÌindustry.Ì€€€€€€€€We€will€resume€promptly€at€11:30,€and€there€isÌmore€coffee,€and€the€rest€rooms€are€right€outside.Ì€€€€€€€€Thank€you.Ì€€€€€€€€òò(A€brief€recess€was€taken.)Ð   	 œÀ   Ðóó€€€€€€€€MS.€HARRINGTON:€€Barbara,€could€you€take€yourÐ   	 ,P   Ðseat,€and€we€are€going€to€ask€you€to€introduce€yourselfÌfor€the€record.€€We€have€a€participant€who€was€delayedÌby€a€late€flight€taking€her€seat€at€the€table,€and€forÌthe€benefit€of€our€participants€and€our€stenographer,Ìwould€you€identify€yourself,€Barbara?Ì€€€€€€€€MS.€MAJESKI:€€My€name€is€Barbara€Majeski.€€IÌrepresent€SNET€from€Connecticut.€€We€represent€only€aÌsingle€state.€€I€work€in€the€regulatory€affairs€group,Ìand€part€of€my€function€is€to€respond€to€FCCÌcomplaints.Ì€€€€€€€€MS.€HARRINGTON:€€SNET€is?ÌÐ	   	 ì,'2   Ð€€€€€€€€MS.€MAJESKI:€€Southern€New€England€Telephone.Ì€€€€€€€€MS.€HARRINGTON:€€Just€for€the€record,€thankÌyou.€€There€is€lots€more€that€can€be€said€on€all€of€theÌissues€that€we€have€just€discussed,€but€now€we€are€goingÌto€focus€on€some€different€issues,€but€Kim€first€isÌgoing€to€give€us€no€more€than€five€minutes€on€the€otherÌissues.Ì€€€€€€€€MS.€WILLIAMS:€€Thank€you,€Kim€Williams.Ì€€€€€€€€I€guess€I€wanted€to€address,€number€one,€someÌcarriers'€concerns€or€IPs'€concerns€that€the€LECs€areÌcavalier€about€the€900€charges,€and€I€can't€speak€forÌevery€LEC,€but€I€know€when€a€customer€calls€in€to€us,Ìwhether€it's€900€or€not,€we€go€through€the€process€ofÌtrying€to€sustain€the€call,€and€I€think€some€of€theÌthings€down€at€the€end€of€the€table€suggested€were€didÌyou€make€the€call,€did€somebody€else€in€the€householdÌmake€the€call,€and€we€do€all€those€things.€€We€justÌdon't€do€you€don't€want€to€pay€it,€we€will€take€it€offÌthe€bill.Ì€€€€€€€€And,€in€fact,€I€used€to€support€the€businessÌoffice€before€I€had€the€job€I€have€now,€and€I€haveÌtalked€to€many€service€reps,€and€it€angers€them€to€haveÌcustomers€run€up€thousands€of€dollars€worth€of€chargesÌthat€they€don't€want€to€pay,€but€we€are€in€the€middle€ofÌthat€situation€where€we€have€already€bought€thoseÌÐ	   	 ì,'2   Ðreceivables€from€you.€€If€we€did€it€because€of€a€reducedÌrate€because€of€adjustments,€that€doesn't€mean€we€don'tÌsend€it€back€to€you.Ì€€€€€€€€I€might€have€confused€that€issue€before,€butÌhowever,€one€for€one,€we€don't€eat€write-offs.€€It€goesÌback€to€the€company€who€sent€it€to€us€to€bill.ÌSouthwestern€Bell€does€not€take€that€loss.Ì€€€€€€€€Number€two,€I€guess€the€issue€of€customersÌcalling€back€more€than€60€days€later,€I€don't€want€toÌmake€it€sound€like€that's€only€a€900€thing.ÌSouthwestern€Bell€gets€calls€from€customers€aboutÌregular€toll€charges€more€than€60€days€later€--Ì€€€€€€€€MS.€HARRINGTON:€€Well,€except€there€is€aÌregulation€on€the€books€here.Ì€€€€€€€€MS.€WILLIAMS:€€And€I€guess€I€need€to€look€intoÌfurther€what€that€says,€and€I€don't€want€to€address€thatÌincorrectly,€but€our€billing€contracts€give€us€theÌauthority€to€remove€charges€from€our€bill,€and€when€ourÌbilling€contracts€are€signed,€carriers€know€what€theirÌ--€or€our€customers€know€exactly€what€they€areÌsigning.€€We€have€the€sole€authority€to€remove€chargesÌfrom€our€bill€if€they€are€not€going€to€be€paid€in€mostÌinstances,€and€900€or€not,€we€are€going€to€take€it€offÌthe€bill€if€the€customer€is€not€satisfied.Ì€€€€€€€€If€the€customer€can't€pay,€won't€pay,€we€willÌÐ	   	 ì,'2   Ðeither€take€it€off€or€he€is€going€to€be€disconnected€forÌnonpayment€and€his€charges€will€be€sent€out€to€aÌcollection€agency.€€So,€the€issue€is€not€just€an€issueÌof€900€in€that€case.€€We€do€that€for€all€charges.Ì€€€€€€€€In€the€case€of€900,€if€he€won't€pay€it,€what€doÌI€do€with€it?€€Then€it's€a€balance€on€his€account€forÌyears€and€years€to€come,€and€it's€money€that€I€don'tÌhave€now,€not€you,€me,€and€so€in€that€respect€it's€ourÌaddressed€in€our€contracts€that€we€remove€all€chargesÌfrom€the€bill€for€nondeniable€services€if€they€are€notÌpaid.Ì€€€€€€€€I€guess€finally,€on€the€issue€of€the€contracts,Ìyou€have€--€I€guess€for€900€services,€I€feel€like€youÌhave€a€choice€on€how€you€want€to€bill€those€services.ÌYou€can€bill€them€on€a€charge€card,€you€can€bill€themÌdirectly,€you€can€bill€them€through€the€LEC,€you€canÌbill€them€through€some€other€company.€€If€you€choose€toÌbill€them€through€the€LEC,€it's€billed€according€to€theÌway€our€contracts€are€written.Ì€€€€€€€€MS.€HARRIN