Pay-Per-Call Rule Review: 900 Number #23

Submission Number:
23
Commenter:
Kathryn Marie Krause
Organization:
U.S. West, Inc.
Initiative Name:
Pay-Per-Call Rule Review: 900 Number
Matter Number:

R611016

Before the
FEDERAL TRADE COMMISSION
Washington, DC 20580

In the Matter of:

900-Number Rule Review--Comment

 


FTC File No. R611016

COMMENTS OF U S WEST, INC.

I. INTRODUCTION

U S WEST, Inc. ("U S WEST") is a broadly diversified company which contains within its operations telephony companies, cable operations and Internet access services. The Federal Trade Commission's ("FTC" or "Commission") proposed rules to change the definition of "pay-per-call services" has the potential to impact all of U S WEST's corporate enterprises. Thus, our comments below should be understood to address the various ways in which the FTC's proposals might affect businesses other than traditional pay-per-call service providers, billing entities or carrier operations.

As a general matter, the FTC's current pay-per-call rules primarily affect those service providers who offer pay-per-call services (whether through a 900 prefix, a presubscription arrangement or billing to a credit card); those entities who bill (either directly or indirectly) for such services; and those companies (generally carriers) who provide "blocking" services associated with the 900 prefix. The traditional communications market landscape lent itself fairly well to accommodating the pay-per-call rules of both this Commission and the Federal Communications Commission ("FCC"), who itself has rules regarding pay-per-call services.(1)

The Commission's proposals regarding changing the definition of "pay-per-call services" are of critical concern to U S WEST to the extent the Commission seeks to extend its rules to telephony services or "audio information" or "audio entertainment" services offered via the Internet. We believe that market discipline and current technology remain the best vehicles for moderating any inappropriate conduct with respect to Internet transactions.

Below, in Section II, U S WEST addresses just a few of the questions raised by the Commission in its "review" of its existing 900 rules. Therein, U S WEST provides limited metric information on the operation of those rules.

In Section III, we address the Commission's proposed expansion of its pay-per-call rules and the implications of such an expansion for Internet Access Providers. U S WEST believes it will be difficult for the FTC to come upon a definition of "audiotext services" that is not over-broad, given the targeted types of services the Commission wants to impact. As the Commission notes, its term "audiotext" reflects "the larger universe of information and entertainment services offered through the telephone"(2) (which would include Internet-accomplished telephony). Yet, for purposes of regulation, the Commission is only to include from that universe "services . . . susceptible to the unfair and deceptive practices that are prohibited"(3) by existing Telephone Disclosure and Dispute Resolution Act of 1992 ("TDDRA") statutes and regulations.

U S WEST encourages the Commission to publicly notice any tentative definition it determines appropriate after this current comment round is concluded. In the absence of specific proposed language, it is difficult to anticipate all of the problems that might arise with any proposed definitional language.

As a general matter, U S WEST believes it is premature for the FTC to promulgate additional pay-per-call-type rules to transactions on the Internet, whether those transactions be in the nature of "telephony" or "audio information" or "audio entertainment."(4) The existing network structure and technology make such an extension awkward at best and perhaps impossible of achievement. These concepts are discussed at greater length below.

II. EXISTING RULES

In light of the Commission's decision to seek comment on its proposed modification of its definition of "pay-per-call," the Commission determined to do its "rule review" (required pursuant to the provisions of 16 C.F.R. Section 308.9) somewhat earlier than the required date of November 1, 1997.(5) With respect to this review, U S WEST has minimal comments.

U S WEST is primarily impacted by the FTC's existing pay-per-call rules in its capacity as a billing agent for interexchange carriers ("IXC"), who in some circumstances themselves operate as billing agents for 900 service providers;(6) and in our capacity as a carrier that blocks access to the 900 prefix upon customer request.(7)

The Commission asks a number of questions looking toward "metric" type of information regarding the impact of its existing pay-per-call rules. For the most part, U S WEST does not accumulate this type of information or maintain it for any significant length of time.(8)

What we can say is that the combination of the federal TDDRA, the rules promulgated by this Commission and by the FCC, the fact that consumers are advised about their ability to block 900 prefixes and some take advantage of the opportunity, the fact that some carriers have taken back from U S WEST their pay-per-call billings, and the conservative contractual approach U S WEST has pursued with respect to pay-per-call services, has resulted in a materially significant reduction in complaints to U S WEST about pay-per-call services. At this time, those complaints are basically de minimis.

In 1993, U S WEST billed in the area of 6 million 900 calls. By 1996, those volumes had decreased to around 2.4 million. With respect to that 2.4 million calls, U S WEST experienced 305 complaints. For the first quarter of 1997, U S WEST has billed for 605,882 calls utilizing a 900 prefix and has had 58 complaints.

Another measure demonstrating how complaint volumes for 900 calls have diminished is the fact that, in 1991, U S WEST had a full time staff of one manager and one occupational employee dedicated to handling such complaints. Today, it takes an occupational employee approximately one hour a week, with management activity ranging between one and three hours a week, to handle such complaints. Furthermore, U S WEST has a 900 Review Committee that, in the past, met on a monthly basis to review 900 telephone numbers which were in non-compliance with either the Commission's/FCC's 900 rules or U S WEST's contracts. That Committee now meets on a "need to meet" ad hoc basis and has not yet met in 1997.

U S WEST has not tracked with statistical precision the "reason" for customer complaints with respect to pay-per-call services. The reasons for customer complaints represent a cross-section, ranging from subscribers claiming that calls were never made from their home,(9) that the calling party was not authorized to place the call or that the calls were placed by minors. Most of the persistent complaints received by U S WEST in the area of 900 calling have to do with calling by minors. Other areas of complaints have to do with what customers perceive to be false or misleading advertising or services for which customers believe they did not get value for their money (a good example of this latter complaint is psychic lines).

The Commission inquires into what percentage of telephone subscribers have chosen to block 900 access and at what point those subscribers made the choice.(10) In U S WEST's territory, about 18% of the telephone lines have 900 blocking.(11) U S WEST is not able to provide the Commission with the point in time when the blocking was imposed (e.g., whether at the time of original service installations or after a negative 900 experience), because information is not tracked in this way. In order to determine when the blocking was ordered, U S WEST would have to do a special investigation involving some type of random sampling of the customer base with 900 blocking to ascertain when the customer asked that the blocking be implemented. At this time, we are not prepared to do such an investigation, with the attendant costs.

The Commission asks about the capability of industry to record and rate pay-per-calls in less than one-minute increments.(12) U S WEST is not particularly aware of the state of the technology in this area (although, we are aware that increasingly the technology seems to be proliferating in the area of toll recording and rating). We do advise the Commission, however, that U S WEST is capable of billing pay-per-calls in less than one-minute increments, to the extent the information is provided to us in that manner.

III. COMMISSION'S PROPOSED AMENDMENT TO ITS
DEFINITION OF PAY-PER-CALL SERVICES

The Commission notes that it has recently prosecuted cases that seem to involve unscrupulous practices by service providers similar to those that Congress sought to control with the TDDRA. In part, because of practices similar to those currently being prosecuted by the Commission, Congress provided the Commission with the authority to amend its definition of "pay-per-call services" so as to be able to bring certain service provider conduct within the scope of the Commission's pay-per-call rules.(13) Congress recently amended 15 U.S.C. Section 5714(1) to provide the Commission with such additional authority, specifically allowing the Commission to expand its authority by broadening its definition of the term "pay-per-call services."(14)

With respect to this modification, the Commission is particularly interested in crafting a definition that would cover those services "which are 'susceptible to the unfair and deceptive trade practices that are prohibited by [TDDRA].'"(15) In framing this issue with greater focus, the Commission asks whether there are "audio information or audio entertainment ('audiotext')" services which are not currently covered by the definition but which might present opportunities for unfair or deceptive trade practices similar to those which the TDDRA sought to address.(16)

Within this context, it does not take the Commission long to get to issues and questions involving the Internet. At this point, U S WEST becomes very concerned.

From the Commission's terminology, it is not entirely clear what the scope of the proposed expansion in the area of "audiotext services" actually is. For example, when first referencing the term, the Commission specifically acknowledges that it is a broader term than "pay-per-call" but that it does always have a "telephone" connection.(17) However, when the Commission begins to substantively address the expansion of its rules to "audiotext services," the telephony connection is not reiterated.(18) Similarly, the FTC News makes no particular reference to a telephony tie, asking only generally whether there are "any audiotext services currently being provided over the Internet or commercial online services?"(19)

Clearly, the terms "audio information" and "audio entertainment" services can have a meaning broader than services offered only through a telephony vehicle. For example, such can be taken in their "purer" sense to refer to either information or entertainment that has an audio component, delivered either electronically or through the traditional telephony network architecture. If this broader interpretation is pressed, the use of the terms becomes even more confusing because, in an Internet context, much of the presentations involve both an audio and video component. Where there could well be an "audio information" or "audio entertainment" offering separate from an accompanying video presentation (see further discussion below), often the information or entertainment contain both audio and video aspects.

Additionally, the concepts are made further complex by the fact that "audio information" or "audio entertainment" can be either one-way (like a broadcast) or two-way and interactive. Indeed, some of the early 900 services involved taped information accessed and retrieved by an individual. Many of these types of offerings remain (accessing and retrieving stored information). However, over time, "live" and interactive 900 services became available. While in a telephony environment, the differences between the two types of offerings might not be material, the difference is material in an electronic environment.

Audio information or audio entertainment can occur over the Internet through a variety of means and through either a "broadcast" model or an interactive one. A particular web site, for example, might accompany its graphics or visual display with an "audio" component. Additionally, an "audio" service might be accessed independent of any need to continue visual contact with Web graphics. For example, a radio feed could play as an individual browsed various Web sites, with the audio being unassociated with the different Web sites visited. This "audio" information/entertainment might be free (once accessed through an Internet Access Provider to whom a fee would be paid); or there might be a charge associated with the service. The service might be accessed via a 900 number or electronically through a Web site, utilizing a pre-established account or credit card billing.

Furthermore, there have clearly been recent developments in the area of "telephony" via the Internet network, which allow for aural communications and the potential for either broadcast or interactive exchanges of "audio information" or "audio entertainment." The first type of "telephony" involves two Internet computer users talking to each other through their computers. This requires both computers to have speakers, a microphone, an Internet connection and special software. While, theoretically, a 900 calling pattern might be set up in this environment, U S WEST is aware of such activity only in limited situations which, at least for the moment, generally involve a broadcast-type format.

Take, for example, an "event" like a rock concert. Such an event might be advertised on the Internet and offered for free. In such a situation, absent a choice to block or screen the content via screening software, an Internet user would access and receive the "entertainment" (an amalgam of audio and visual entertainment) on the Web, generally through the intermediation of an Internet Access Provider. However, in these circumstances, the "quality" of the offering is often very questionable.(20)

Thus, such events are sometimes offered via 900 numbers. The advertising for such events might be on a Web site on the Internet. However, access is not accomplished through an intermediate Internet Access Provider. Rather, the caller directly accesses the entertainment through dedicated access lines. (In substantial part, this is done because of the better sound/graphic quality of the event when it is not accomplished via the general Internet itself.)

It is U S WEST's understanding that these type of calls, when a 900 prefix is actually used, will be blocked in those instances where the telephone line associated with the modem (analog) connection has 900 blocking on the line, i.e., the modem will not complete the call. Furthermore, it is our understanding that most "events" do their billing via credit card payment arrangements.

Another type of Internet "telephony" is also being provided. That telephony allows a caller from a Personal Computer ("PC") to talk with a telephone subscriber who is not hooked up to a computer or to the Internet but to the Public Switched Telephone Network ("PSTN") through a traditional telephone station. As a general matter, this technology works as follows: A user would be sitting in front of a PC equipped with special voice activation software and modem capabilities. Knowing the URL address of voice processing business (a PSTN Gateway), the calling party would create an Internet connection to the Gateway, instructing the Gateway to dial a telephone number. The PSTN Gateway would convert the analog voice from the PSTN into Internet Protocol ("IP") packets and vice versa.

The above Internet telephony description, while it involves a calling and called party is not the equivalent of the current dialing/switching activity of the PSTN. If the calling party were to direct the PSTN Gateway to call a 900 number, it would be the Gateway's telephone number that would be transmitted. Clearly, the Gateway Provider would be unwilling to place such a pay-per-call unless that Provider had some ability to bill the charges back to the calling party. Unless that Provider were interested in getting into the area of 900 billing (which, as far as U S WEST is aware, is not a general activity undertaken by such Providers), the Gateway Provider would provide alternative billing arrangements (such as a presubscribed account or a credit card).

The above descriptions are provided primarily to point out to the Commission that Internet Access Providers (or cable operators offering cable modem services) are not in the position to "block" access to audiotext, audio/videotext, or audio entertainment offerings, unlike local exchange carriers ("LEC") in the traditional telecommunications environment. In a traditional telecommunications environment, the 900 block is done in the central office switch and controls outbound dialing access attempted from the subscriber's loop and station.(21)

The technological architecture associated with Internet access services -- whether provided by Internet Access Providers or cable modems -- does not support "blocking" as that concept is currently understood. With respect to the Internet Access Provider situation, the number dialed by the end user accessing the Internet through the Provider is not a 900 number, but generally a local seven-digit or 800 number. Thus, the central office has no way of identifying the called number as one that should be "blocked" and would complete the first connection. Once gaining access to the Internet through the Internet Access Provider, the information is in digital form and, because of volume, is not "read" by the provider/operator. In the cable modem context, they become the Internet Access Provider, so no additional provider beyond that is required. However, in this context, there is no interaction with a central office switch and the cable architecture does not include a "blocking" capability.

Given the above, it seems quite clear that the key to controlling access to "audio information" or "audio entertainment" in an electronic environment, particularly the Internet, is the screening software available to the public either for free (via downloading on the Internet) or for a charge.(22) In this regard, 900-type content is no different from other types of "objectionable" content.

It seems obvious that one of the motivations of the Commission with respect to rule amendments is to make fines, as well as injunctions, a part of its enforcement arsenal as pay-per-call-type services and service providers move to electronic communications.(23) While the motivation is understandable, the implementation is more problematic, since the change must come through a "definitional" modification.

However, once an acceptable and workable definitional modification is determined, it is clear that the FTC could accomplish its objectives by embellishing the disclosure obligations currently required of service providers. For example, as the Commission made clear in its Complaint against Audiotex, Audiotex failed to disclose material facts about how certain software operated and intentionally caused a silencing of the dialing of the second international telephone number. The Commission could prohibit both activities either through its advertising rules or its service standard rules.

However, the Commission should make clear that transport carriers and communications routers have no vicarious liability for service provider obligations and no responsibility for enforcing such disclosure obligations beyond those responsibilities currently applicable.(24)

Lastly, the FTC inquires about the possibility of controlling international pay-per-call services through a modification of its existing pay-per-call services definition. Implicit in its discussion (as well as its FTC News press release) is the concept that blocking of prefixes other than 900 might be appropriate (e.g., international numbers or those to specific areas (such as the Caribbean which uses an 809 area code)).

International blocking, generally, is not a particularly targeted approach to dealing with international pay-per-calling conduct. In part, this is because not all international calling involves an IDDD dialing format. Also, international call blocking of the IDDD dialing format is ubiquitous -- not targeted. An international "block" put in place stops all calling to international locations. It makes impossible spontaneous or casual calling, even when desirable.

Currently, most LECs offer such dialing restrictions to business customers (for a charge). However, for business callers that need international calling access, there is no method of blocking only international pay-per-call numbers (which are often subject to quick changes). Furthermore, because of the method by which international blocking is provisioned, most LECs do not make such blocking generally available to mass market customers and provide the offering only upon specific request.(25)

Furthermore, "international" blocking would not control dialing associated with the North American Numbering Plan, which includes calls to Canada and the Caribbean. Area codes are not "prefixes" (such as 900). Any attempt to block access to 809 dialing would block access to all calling to that area code. And, unless the blocking could be wrapped into the current 900 blocking line class code, the blocking would be very expensive. Finally, none of the blocking discussed herein would control the dialing of 1-800 numbers to access pay-per-call services in foreign jurisdictions.

As U S WEST has advised the FCC in the past that international or area code blocking suffers from many of the same infirmities as line blocking in a Caller ID environment,(26) such blocking cannot be changed on the spur of the moment. Thus, casual and spontaneous calling to the blocked calling areas cannot be accomplished. Furthermore, such prophylactic blocking generally feeds on consumer fear rather than any specific experience of abuse.

For all these reasons, additional "blocking" of dialing patterns is not the best reasoned approach.

IV. CONCLUSION

U S WEST believes that a combination of factors have led to a material and substantial reduction in 900 billing complaints, even under the FTC's current iteration of its pay-per-call rules. While there might be some merit in reviewing the current definition of "pay-per-call service," it is very unclear what such a definition might look like that would not be overbroad, given the harm the Commission is seeking to prevent. As the above discussion makes evident, a rule premised on such terms as "audiotext," "audio information," or "audio entertainment" -- particularly as those terms might be used within the context of electronic services such as those provided over the Internet -- would be much too broad. For this reason, U S WEST strongly urges the Commission, once it has devised a proposed definition that it believes would avoid inappropriate overbreadth, to seek additional comment on the specific definition itself. The Commission's efforts can only be enhanced by securing comment with respect to the particulars of a regulatory regime in this area.

Respectfully submitted,

U S WEST, INC.

By: __________________________________
Kathryn Marie Krause
Suite 700
1020 19th Street, N.W.
Washington, DC 20036
(303) 672-2859
Its Attorney

Of Counsel,
Dan L. Poole

May 12, 1997

1. See 47 C.F.R. § 1501 et seq.

2. 62 Fed. Reg. 11750, 11751 n.8 (Mar. 12, 1997).

3. Id. at 11751.

4. See the discussion below regarding the use of these terms.

5. 62 Fed. Reg. at 11751.

6. U S WEST does not bill for 900 service providers directly. Furthermore, our contracts preclude IXCs passing us pay-per-call information utilizing 800 numbers or any number that does not involve a 900 prefix.

7. At this time, U S WEST does not offer 900 services, although we might do so in the future.

8. The FCC's record retention requirements regarding 900 billing are for 18 months. 47 C.F.R. § 64.1511(a); see also 47 C.F.R. § 42.6. U S WEST does not keep the information any longer than that.

9. The Commission asks about "phantom billing" which it describes as a situation where a subscriber is billed for an audiotext call that the subscriber asserts was never placed from the subscriber's telephone. 62 Fed. Reg. at 11755, Question 31. U S WEST has had complaints of this nature, which usually involve a fact pattern where calls were placed within a few minutes of each other, to the same number (usually 900) for varying lengths. Upon discussion with carriers, U S WEST is repeatedly advised that it is "impossible" for a subscriber to be charged for a pay-per-call call from their station unless the call was placed from that station. We look forward to reviewing comments on this issue.

10. 62 Fed. Reg. at 11754-55, Question 27.

11. A single telephone line might involve a number of different telephone numbers (for example, where a single line is associated with a hunting service, rolling over to different numbers).

12. 62 Fed. Reg. at 11754, Questions 17, 18.

13. FTC News, rel. Mar. 11, 1997, at 2 ("FTC News"); see also 62 Fed. Reg. at 11751.

14. 62 Fed. Reg. at 11751 and n.6.

15. Id. at 11755.

16. Id.

17. Id. at 11751 n.8.

18. Id. at 11755.

19. FTC News at 3, Question 4.

20. In a digital network, to deliver high quality audio/video (which such a concert would involve), all packets must be delivered and arrive at precise times and in precise sequences. This is not the norm of the Internet. Thus, the "quality" of these types of offerings is not high.

21. Note that this is what "blocks" access to 900 calls made directly from a modem to a 900 number, but that do not go through an Internet Access Provider.

22. Compare the substantial record established in the Communications Decency Act judicial record on the availability of such screening software. American Civil Liberties Union v. Reno, 929 F. Supp. 824 (E.D. Pa. 1996), appeal pending, No. 96-511 (U.S. Supreme Ct.).

23. FTC News at 2.

24. Compare 47 U.S.C. § 228(e). Generally, neither an Internet Access Provider nor a router of information would be in a position to act "knowingly" with respect to information crossing its network because the volume of the information and its digitized format make real-time access or knowledge of contents impossible. For "knowledge" to occur, a user would have to contact a provider or router independently to explain the problem.

25. LEC international blocking is generally accomplished via a service order and a "hard wired" line class code designation associated with the individual requesting the service. This is an expensive process and, if offered ubiquitously, would involve significant utilization of switch memory.

26. See In the Matter of Request for Additional Comments on the Costs and Benefits of International Blocking for Residential Customers, CC Docket No. 91-35, Reply Comments of U S WEST Communications, Inc., filed May 8, 1995, at 8-10.