Pay-Per-Call Rule Review: 900 Number #28

Submission Number:
28
Commenter:
Richard C. Bartel
Organization:
Communications Venture Service, Inc.
Initiative Name:
Pay-Per-Call Rule Review: 900 Number
Matter Number:

R611016

COMMUNICATIONS VENTURE SERVICES, INC.
5530 Wisconsin Avenue, #703, c/o P.O. Box 70805
Chevy Chase, Md. 20813-0805
(202) 728-3841, rcbartel@iname.com

June 20, 1997

Federal Trade Commission (FTC)
Washington, D.C.

Public Forum on "900" style services
Public Comment Submission (June 20, 1997)

File R-611016

I. DEFINITION OF "PAY-PER-CALL"

The comments almost universally supported expansion of the definition of "pay-per-call" to all dialing patterns which can be used to provide audiotext services. However, commenters disagreed on how to best define "pay-per-call" in order to capture these other dialing patterns.

CVS believes that "pay-per-call" should include any tele-communications wherein which the charge(s) to the calling party exceed the fair, reasonable, and nondiscriminatory costs of telecommunications services (as defined in Sec. 3(a)(51) of the Telecommunications Act of 1996). "Costs of telecommunications services" should not include any present or future commissions, finders fees, kickbacks, or other equitable or financial interest not accruing to the carrier(s) providing telecommunications services.

How can a definition of "pay-per-call" be crafted which accurately identifies, pursuant to the 1996 Act, those audio information or audio entertainment services which are "susceptible to the unfair and deceptive practices that are prohibited" by the current 900 Number Rule?

We believe that the only way one can identify services which are "susceptible to the unfair and deceptive practices that are prohibited" is to create a legal rebuttable presumption(1)that all charges in addition to the actual fair, reasonable, and nondiscriminatory costs of telecommunications which exceed a defined multiple (i.e. 20x) of the underlying telecommunications cost element, are "susceptible" to prohibited practices. It is a daunting practical, and almost impossible legal task, to identify "susceptible" practices by content or technology classification(s).

Is the financial benefit to the information provider the primary identifying characteristic of a "pay-per-call" service? Alternatively, is a relatively high per-minute price the correct hallmark of a "pay-per-call" service?

It is difficult, if not impossible to account for the "financial benefit" to the information provider. The richness of content is generally aligned with the cost of the underlying bandwidth necessary to deliver the product (i.e. multi-media, high speed data, high resolution video and audio). It is suggested that a professional who is and is required to be licensed by a Federal or State authority (i.e. physician, lawyer, flight instructor, therapist, etc.) can rebut the presumption of "susceptibility" if he or she personally and interactively (live) provides a professional service for which charges made are disclosed in advance and which are subject to preamble conditions.

If financial benefit to an information provider is the correct identifier of a "pay-per-call" service, should all calls where an IP receives remuneration from a LEC or carrier be captured by the definition? Yes.

Should there be a threshold percentage of the per-minute charge (e.g., 5%), or a cap on the per-minute amount received by the IP, below which calls would be excluded from such a definition, so that "TSAA" type arrangements would not be brought within the scope of the rule as suggested by AT&T? How would such a threshold work?

We believe that the only way one can identify services which are "susceptible to the unfair and deceptive practices that are prohibited" is to create a legal rebuttable presumption(2)that all charges in addition to the actual fair, reasonable, and nondiscriminatory costs of telecommunications which exceed a defined multiple (i.e. 20x) of the underlying telecommunications cost element, are "susceptible" to prohibited practices. It is a daunting practical, and almost impossible legal task, to identify "susceptible" practices by content or technology classification(s).

What would be the consequences of restricting all pay-per-call services to specific dialing patterns? What would be the consequences of expanding the definition of pay-per-call to include international audiotext services without any corresponding modifications to the rule to exempt such services from requirements to provide free preambles, cost disclosures, and billing notice and billing dispute procedures?

With the proliferation of dialing patterns and exchanges used for Caller -Paid services (Interstate (900), 1+NPA international, and Intra-State (i.e. 976, etc.), the dialing pattern is less and less reliable as reasonable Notice to the public that a call will be charged to the caller. Thus, it is suggested that all pay-per-call calls (subject to the definition proposed above) be required to begin a preamble(3)if and when the call reaches a $2.00+ premium(4) charged to the caller at any time during the call, regardless of the dialing pattern (including 1+ and 0+ dialed pay-per call calls), except for specific valid presubscription agreements. Thus an information service would always be able to collect transport plus the first $2.00, even for disputed billings, reducing overall chargeback impacts.

II. COST DISCLOSURES AND OTHER CONSUMER PROTECTIONS FOR NON-900# DIALING PATTERNS:

Commenters generally agreed that the cost and other disclosures required by the 900# Rule had benefited both consumers and the industry. Although industry costs have increased, those costs are outweighed by an increase in the volume of calls and in profitability as consumer confidence increased in the use of 900#s. Consumer complaints about 900#s have decreased dramatically, whereas complaints about audiotext services using non-900# dialing patterns have increased.

What should an advertisement for an international pay-per-call service be required to disclose?

Subject to the above suggested Preamble starting at a $2 premium above, simply that the caller is making an international call.

Should the Rule require preambles for such services, even if it would cost the consumer money?

Under our proposal, the caller would still be paying the fair, reasonable and nondiscriminatory telecommunications service charges during any preamble, which preamble would only be required to begin when the premium charge exceeded $2 increments.

What should such a preamble disclose?

The preamble should simply and succinctly disclose that the are premium charges of $___ per minute or $____for further completion of the call(5), being charged to the caller.

Would it be possible for international audiotext calls to be billed in the same (or similar) fashion as 900 numbers if IPs were required to inform LECs and long distance carriers (in advance) that such numbers are actually "pay-per-call" services?

Local Exchange Carriers with billing agreements which bill the caller could identify those NPA-NXX-xxxx (by line number)(6) for which they provide billing, and that LEC (or interexchange carrier based upon a LEC provided trigger or class code or DNIS) could provide an initial preamble before the call is released for termination. The LEC could collect the initial undisputed $2.00 premium for providing this service to the information provider..

Could current Rule requirements be applied fairly to non-900 audiotext services? Would different disclosure, billing, billing notice, and blocking requirements be necessary? Would these different requirements be fair to 900 number operators? Would these requirements give a competitive advantage to such services that had more lenient requirements?

Our proposal would not require discrimination between domestic and international call treatment.

What can be done to ensure that consumers have the right to dispute charges for any audiotext services which are billed as a result of a consumer having made a telephone call? How can consumers identify the IP who provides an audiotext service via an international number? How can the issue of disconnection for failure to pay non-900 number charges be addressed?

Our proposal would make all charges collectible in $2.00 consensual increments, with the first $2.00 premium charge indisputable.

III. PRESUBSCRIPTION AGREEMENTS:

For what types of services should a presubscription agreement be required? Should the FTC rule require that presubscription agreements be in writing? To be signed by the telephone subscriber? What about electronic form?

Presubscription agreements should be allowed, not required. Presubscription agreements should be demonstrated to be enforceable under the State law of the Caller in contract (absent any and all tariffs).

How might the current 900 Number Rule be modified to be consistent with the changes in TDDRA made by the Telecommunications Act of 1996? With the changes made to the FCC regulations as a result of the 1996 Act? With the additional changes proposed by the FCC?

The FTC's regulations should be referenced in appropriate F.C.C. regulations, and vice-versa, and be referenced in all Tariffs as a standard language of reference.

What additional steps can be taken to ensure that a telephone subscriber is not billed (either by secondary collection efforts or otherwise) for a presubscription service agreed to by a third party?

Subscribers should have available "Pay-Per-Call blocking", circumscribed only by a PIN code specified by the Subscriber as part of his/her customer service record.

By a minor?

The government is in no position to determine whether or not a minor is dialing a telephone. That should be the responsibility of the Subscriber, whom may control Pay-Per-Call access by way of PIN code "block-disable" or contractual arrangements with specific service providers with Customer verification enforceable under State contract law of the caller.

What can be done to prevent consumers from unknowingly entering presubscription agreements whereby they are charged on a monthly basis? What can be done to ensure that consumers who have done this can easily dispute or terminate such agreements? Are the IPs making themselves available to consumers who have done this to receive and respond to complaints and requests for cancellation?

Under our proposal, presubscription agreements should be enforceable under the State law of the Caller / Subscriber, with additional Federal requirement for positive identification of the contracting parties.

IV. MISCELLANEOUS:

Should additional measures be taken to protect consumers from misleading sweepstakes offers which utilize pay-per-call services? Should preamble requirements be changed? Should the Rule require additional disclosures relating to the odds of winning or the alternative means of entry? Should the Rule prohibit certain types of misrepresentations in connection with Sweepstakes?

We found our analysis based on the validity and enforceability of contracts under the State law of the Caller / Subscriber, requiring a corporate service provider to be registered as a foreign corporation in the State of the Caller. If not, then the individual causing the billing for the service provider will become personally liable to the Subscriber for fraudulent charges.

What types of calls currently fall under the nominal cost exemption? What is the chargeback rate for these calls? Should the nominal cost threshold be changed? Should it be adjusted for inflation periodically?

As we stated above, we believe that the first $2.00 premium should be indisputable, with incremental $2.00 premium preamble segments for the duration of the call.

What modifications to the preamble requirements, if any, are necessary to deal with offers of "free time?" Should an IP have to provide a tone or other signal which informs a consumer when free time has expired? Should such tones be required to indicate any rate change which occurs during a call? Alternatively, should preamble requirements be modified to deal with such situations?

We believe that tones are inadequate unless they are well above the dB level of the underlying message, are surrounded by a pausing silence of 1 second on each side, represent a billing increment of no more than $2, and are followed by at least a 7 second hang-up lag time of no additional incremental charge. In addition, we would recommend that a subscriber in these cases be able to press a trigger (i.e. *) to get a running total of aggregate charges on the call.

With respect to adult pay-per-call services, what is the current industry practice regarding the parental permission admonition? What data exists to support the assertion that the dual warnings referred to in comments is confusing to consumers or ineffective in reducing the incidence of calls by minors?

We do not support governmental Regulation based on content. We suggest that telephone and voice recognition technology is now sufficient to screen out sounds and words deemed offensive by the Subscriber (i.e. parent), which will automatically terminate the call. (i.e. audio "V-chip").

V. IMPACT OF NEW TECHNOLOGY:

Many commenters expressed concern about premature regulation of Internet advertising. Yet consumer agencies are receiving increased numbers of complaints regarding audiotext services that are using this new medium. In addition, new telecommunications technology will provide new opportunities for provision of audiotext services (e.g., video conferencing).

The internet service industry has made significant progress in regulating "spamming" and screening offensive content at the Web Browser level, password protected from changes by minors.

What types of technology are likely in the near future that will extend the opportunities for audiotext services? How can regulators craft rule provisions that will be broad enough to avoid becoming obsolete as new technologies are developed?

Regulators risk language which is too broad to be constitutionally enforceable. Thus, regulators should focus on disclosure requirements and technological solutions which place criteria in the hands of the Subscriber / Parent.

Are the general consumer protection statutory provisions sufficient to regulate new technologies as they develop? Are there sufficient complaints to justify special coverage of Internet advertising at this point?

Yes. Maybe too general. No, internet service providers and Browser designers have made significant progress to mitigate "spamming" and have designed adequate user defined Content controls.

June 20, 1997

Richard C. Bartel
President

1. Provided that a tariffed rate shall not be prima facie evidence of an indicator of actual cost nor constitute sufficient rebuttal of this presumption. It is a common public misconception that a tariffed rate is one which has been found to be fair, reasonable, and nondiscriminatory. Tariffs are only Notice filings subject to comment and are not adjudicatory findings of regulatory bodies nor "permits" or "licenses" under the Administrative Procedures Act. (Also see: In re Fontainebleau Hotel Corp., 508 F.2d 1056, 1059 (5th Cir. 1975); In re Kassuba, 396 F. Supp. 324, 326 (N.D. Ill. 1975); Directional Int'l, Ltd. v. Illinois Bell Telephone Co. (In re Personal Computer Network, Inc.), 85 Bankr. 507, 508 (Bankr. N.D. Ill. 1988)).

2. Provided that a tariffed rate shall not be prima facie evidence of an indicator of actual cost nor constitute sufficient rebuttal of this presumption. It is a common public misconception that a tariffed rate is one which has been found to be fair, reasonable, and nondiscriminatory. Tariffs are only Notice filings subject to comment and are not adjudicatory findings of regulatory bodies nor "permits" or "licenses" under the Administrative Procedures Act. (Also see: In re Fontainebleau Hotel Corp., 508 F.2d 1056, 1059 (5th Cir. 1975); In re Kassuba, 396 F. Supp. 324, 326 (N.D. Ill. 1975); Directional Int'l, Ltd. v. Illinois Bell Telephone Co. (In re Personal Computer Network, Inc.), 85 Bankr. 507, 508 (Bankr. N.D. Ill. 1988)).

3. And cease billing to the calling party until the preamble's time for caller hang-up expires, at which time billing is resumed until another $2.00+ is billed, giving the consumer several opportunities to avoid escalating charges. The caller would continue to pay the underlying fair, reasonable, and nondiscriminatory telecommunications charges during the preamble.

4. Premium is the charge above and beyond the fair, reasonable, and nondiscriminatory actual telecommunications cost(s) charged to the caller.

5. If the completion charge does not exceed another $2.00 premium above the "long distance" telecommunications charges (as before, the fair, reasonable, and nondiscriminatory) until completion of the call. Technology today could provide a preamble which discloses both the transport and premium charges and gives a balance each time the caller presses a trigger tone (i.e. *).

6. Through query of it's own internal database before releasing the call interstate (or inter-LATA).