Pay-Per-Call Rule Review: 900 Number #4

Submission Number:
4
Commenter:
Joel R. Dichter, Jane B. Jacobs
Organization:
International Telemedia Association
State:
NY
Initiative Name:
Pay-Per-Call Rule Review: 900 Number

Before the
FEDERAL TRADE COMMISSION
Washington, D.C. 20580

In the Matter of

900-Number Rule Review -- Comment

FTC File #R611016

COMMENTS OF THE INTERNATIONAL TELEMEDIA ASSOCIATION

The International Telemedia Association (hereinafter "ITA"), by its attorneys, Klein, Zelman, Rothermel & Dichter L.L.P., respectfully submits these comments upon the Federal Trade Commission's (hereinafter "FTC's" or "Commission's") March 11, 1997, Rule Review Pursuant to the 900-Number Rule and Request for Comment Regarding Possible Modification of Definition of "Pay-Per-Call Services" Pursuant to the Telecommunications Act of 1996.

ITA is a London-based non-profit organization comprised of international "service operators" i.e., terminating points for international calls, which function in the same manner as service bureaus in the United States. ITA membership encompasses the majority of international service operators. Additionally, ITA has expanded its membership to include information providers, foreign telecommunications carriers and consumer organizations.

In our comments, we will endeavor to respond to the questions pertaining to the expansion of the 900 rules to international services. With the emergence of a global marketplace, the evolution of international standards is the only viable method for addressing a number of the concerns raised by the Commission. This requires the international audiotext community to establish guidelines for the offering of such services. The ITA has been at the forefront of this effort and we welcome the input of the Commission on the Code of Practice previously presented to the Commission. Therefore, ITA requests the opportunity to participate in the June 19 and 20, 1997 workshop and subsequent discussions. Given the public interest in fostering an environment for the exchange of information worldwide, in fashioning regulations, we respectfully request that the Commission balance the acknowledged need for reasonable consumer safeguards with the growing demand for access to information from all points of the globe.

1. Section G (1): Whether There Are Services Not Currently Covered by the Definition of "Pay-Per-Call Services" That Are "Susceptible to the Same Unfair and Deceptive Trade Practices Prohibited by the Current Rule"?

The Commission has asked for comment on this issue, and additionally as to whether the Rule should be amended to cover those services; if so, how; the impact of such changes on consumers and businesses; and what characteristics of these services make it susceptible to "unfair and deceptive trade practices. . . ."

In response to the initial question, certainly in any industry there is potential for unfair or deceptive trade practices; however, ITA has taken strong, affirmative steps to prevent and deter such practices in the international audiotext market. For instance, ITA members operate security procedures for the early identification of IPs engaged in potentially deceptive practices. The membership of ITA then exchange intelligence to address such practices uniformly.

ITA voluntarily has adopted a Code of Practice and recently has adopted an Appendix to the Code governing the United States market (both attached as Exhibit A). The Code and, in particular, the Appendix parallel as closely as possible the safeguards contained in the TDDRA.(1) All members agree to abide by the terms and spirit of the Code of Practice as a condition of membership in the ITA. Thus, international traffic involving members of ITA -- a majority of such traffic -- is subject to nearly the same restrictions as domestic pay-per-call services.

The attached ITA Code of Practice:

requires that all programs comply with the laws of the country within which the service is advertised (Code of Practice, ¶5.2.3);
 
requires that all promotional advertising conform to the laws and advertising standards of the country in which it is placed (Code of Practice, ¶5.4.2);
 
prohibits misleading, incorrect, ambiguous or exaggerated claims in advertising (Code of Practice, ¶5.4.3);
 
requires that advertising include details of relevant call charges(2) (Code of Practice, ¶5.4.4);
 
prohibits directing advertising for adult services to callers under the age of 18(3) (Code of Practice, ¶5.4.5).

The Code of Practice also contains various measures to maximize consumer and network protection, including requirements that service operators be equipped to monitor and analyze traffic for duration, patterns, calls from non-authorized carriers, operator connected calls and other areas. Service operators are required to apply plausibility analysis to received traffic as to traffic volumes in relation to advertising efforts, volume of traffic from non-target markets, traffic patterns by advertising media, and traffic response to time of a television advertisement. (Code of Practice, Section 6).

Additionally, in October, 1996, as a result of discussions with officials of the Commission and Federal Communications Commission ("FCC") officials, ITA adopted an Appendix to the Code of Practice applicable to the United States market. As noted, by this Appendix, ITA attempted to approximate the TDDRA requirements as closely as possible given the available technology. Among other things, the Appendix contains provisions relating to a preamble, advertising and marketing to minors.

As to a preamble,(4) the Appendix requires:

A preamble limiting service to adults 18 years of age or older, indicating that international long distance rates apply to the call and providing a short description of the service. (Appendix, ¶5.2).

The preamble must be delivered in a slow, deliberate and comprehensible manner. The use of the word "free" or any close derivative is prohibited. (Appendix, ¶5.2).

As to advertising, the proposed Appendix provides in ¶5.4:

that promotion of international telemedia services is limited to bona fide international direct dial codes;
 
that the use of the word "free" or any close derivative is prohibited;
 
that the disclosure "International Long Distance Rates Apply" must be clearly and horizontally displayed.
 
that all disclosures be of sufficient size, and that they must contrast with the background to insure that the disclosure is noticeable, readable and comprehensible; and
 
that in radio or television advertising, if the telephone number is contained in the audio or video portion, then "International Long Distance Rates Apply" must be stated at least once in the audio portion of the advertisement.

Finally, the Appendix prohibits marketing to minors under the age of 12, and requires that marketing directed at minors under the age of 18 clearly and conspicuously require the caller to have the permission of a parent or guardian before calling the service. (Appendix, ¶7.3).

Thus, ITA is policing its own industry, and any change in the definition of pay-per-call services to encompass international calls on 011 is unnecessary. The Commission has previously indicated support for self-regulation. In this regard, the ITA has actively policed its members with specific rules closely approximating the TDDRA. Given that ITA's members' terminations are located outside of the United States and are not subject to the Commission's regulations, the fact that members voluntarily have adopted these regulations shows a genuine and effective desire to ensure that consumer protections are in place. It further shows an eagerness and ability to regulate the industry's conduct in much the same manner that the Commission and FCC have done domestically. It simply is unnecessary to impose additional regulation on an industry that already has subjected itself to the same regulation.

2. Whether the Definition of Pay-Per-Call Services Can Be Crafted to Include Services Susceptible to Unfair or Deceptive Practices without Including Those That Are Not?

3. Whether the Rule Should Be Extended to Cover "International Audiotext Transactions" in which An Information Provider or Service Bureau Receives a Portion of The Fees Paid by A Caller?

4. Whether the Definition of Pay-Per-Call Services Should Be Broadened to Cover Calls in which An Information Provider or Service Bureau Receives a Portion of The Fees Paid by A Caller?

Even assuming that the need exists to extend the Rule or broaden the definition of pay-per-call services to encompass international calls, such an effort is futile. Calls on 011 placed to international POTS lines are no different than calls placed to an overseas friend, relative or business associate. There is no technological basis on which to distinguish audiotext calls from other calls.

If the definition of pay-per-call services is broadened to include calls in which the information provider or service bureau receives a portion of the fees paid by a caller, the Commission necessarily will include calls that it does not intend to regulate. For example, if a computer company established an overseas technical assistance service for which no premium charge is assessed, and if a carrier remitted a fee to that company for encouraging traffic, such an arrangement would fall within these rules. Clearly such an arrangement is not one that the Commission would seek to regulate. Moreover, such an arrangement should not be -- nor would it fit easily -- within the rules governing pay-per-call services.(5)

The plain intent of Congress was to cover services for which a premium charge is imposed beyond the normal costs attendant to transmission; international calls are not within that category, and the definition cannot be expanded to include international audiotext services to the exclusion of all other international calls.

5. Whether There Are Technological Differences between 900-Number Audiotext Services and Non-900 Number Audiotext Services That Preclude Application of The Rule in Its Current Form?

As shown above, even if the Rule and definition of pay-per-call services could be broadened to include international calls, the TDDRA cannot be imported wholesale to such services. The difficulties in disclosing the cost of the call are discussed above. At most, cost disclosure could provide the approximate range of rates as of the date on which the advertisement was created.(6) Even this approach is fraught with difficulty, given that rates change daily, the potential number of rates is vast, and because the first minute usually is charged at a far higher rate than subsequent minutes. Even if a consumer is told, for example, that rates range from fifty cents per minute to three dollars per minute, that provides no useful information for the consumer, who has no way to determine the rate that will be charged unless s/he calls the carrier. In fact, such a disclosure is itself deceptive, in that a consumer may assume that because s/he is calling at a late hour or on a weekend that s/he will receive the lowest rate, when that rate is not offered by his or her carrier.

ITA's approach is to conspicuously advertise the fact that "International Long Distance Rates Apply". Consumers are thereby warned that this is an international call, and may call the carrier -- the only entity that can provide more specific information -- for more detail.

Similarly, we have mentioned that a cost-free preamble is not possible on 011 calls. Because the call is carried by the consumer's chosen carrier, the information provider and service bureau are not responsible for the billing, and could not offer a cost-free preamble even if it were technologically possible to do so.

Similarly, billing and collection requirements, as well as requirements concerning consumer billing inquiries, do not translate to international calls. Because the consumer's carrier performs all billing and collection, and because international audiotext calls are indistinguishable from other international calls, there is no way in which to segregate these charges on a bill or to provide information about the information provider or service bureau for consumer use.

In sum, while the advertising requirements can be refashioned to apply to these calls -- which ITA already has done voluntarily -- most other provisions of the TDDRA cannot be imported to international calls.

8. Audiotext Services on the Internet

To the extent that international calls are advertised on the Internet, the same results obtain. That is, some manner of advertising regulation is possible, but the same disclosures should be applicable and the same problems arise as to other TDDRA provisions.

9. Prevention of Consumer Complaints

With regard to international calls, it is the subscriber's carrier (i.e., AT&T) that bills the caller. Billing inquiries are therefore handled by the carrier and not the information services provider. The major carriers now forgive, all or a portion, of disputed charges for international information calls. ITA members have worked with the carriers and PTTs to establish policies for handling such "uncollectibles." Consequently, consumer complaints have been addressed in a more responsive and timely manner.

As for restricting access, while it may be possible for a consumer to block all international calls or in some cases to block international calls to a particular country code, because international audiotext calls to POTS numbers are technologically indistinguishable from other international calls, there is no way in which to block only these calls. However, AT&T has long stated that in most cases callers to international information services are not generally users of international services and little inconvenience arises from blocking all international calls (which still may be accessed through operator assistance). Due to rapid technological advances in the field of telecommunications, the issue of blocking could be periodically re-visited.

10. Consumer Complaints

For the reasons set forth above, it is not possible to segregate international audiotext calls on a telephone bill or to provide customer service information specific to these calls.

As ITA representatives have advised the Commission and the FCC, if these agencies wish to forward such complaints to ITA, ITA is willing to ensure that they are addressed by its members. Indeed, we welcome this intervention, as it will enable ITA to determine quickly and easily if a member is not adhering to the Code of Practice and Appendix.

Conclusion

For the reasons set forth above, we respectfully submit that the concerns raised by the Commission already have been addressed and remedied by the ITA for the majority of international traffic. We again note that ITA's membership is expanding not only among service operators, but also now includes information providers, carriers and consumer organizations.

ITA appreciates the opportunity to offer its comments. As evidenced by its meetings with the Commission and FCC, which were initiated by ITA, ITA welcomes the opportunity to obtain any feedback possible from US regulatory agencies so that it can better target is own efforts at self-regulation.

Dated: New York, New York

May 11, 1997

Respectfully submitted,

By:__________________________
Joel R. Dichter
Jane B. Jacobs
Klein, Zelman, Rothermel & Dichter L.L.P.
485 Madison Avenue
New York, New York 10022
212-935-6020

ATTORNEYS FOR INTERNATIONAL TELEMEDIA ASSOCIATION

Roy Ellyatt, Chairman
Toby Padgham, Secretary
International Telemedia Association
Abbey House
4 Abbey Orchard Street
Long SW1P2JJ
+44 171 976 0966

1. As discussed below, it is not technologically possible to impose all TDDRA requirements on the international market; however, the ITA's Code and Appendix do so as nearly as possible.

2. As noted above, some portions of the TDDRA cannot be imposed on international calls. For example, advertising for domestic calls to 900 numbers must provide precise cost information. As to advertising for international calls placed on 011 to POTS numbers cannot provide the same information. The charges for a 011 call to a POTS number will depend on the carrier, the point of origin of the call, the time of day, the day of the week, discount calling plans to which the caller subscribes (e.g., "Friends and Family", "True Reach Savings"), rate changes by the carrier, and a host of other factors. Even if two callers place the same call from the same city at the same time, they may be charged vastly different rates. Thus, it simply is not possible to advise a caller of the precise, or even the approximate cost of the call.

While an advertisement could provide an approximate range of rates for the call, as discussed below, the high and low end of that range are likely to be so far apart as to provide little useful information to the caller.

3. A more comprehensive regulation of marketing to minors is contained in the Appendix relating to United States calls, discussed below.

4. While the TDDRA prohibits billing for the preamble or prior to the time that a caller can hang up without incurring a charge, this is not possible with a 011 call to an international POTS number.

5. For example, any brochure providing the number would have to comply with all TDDRA advertising requirements, a result clearly not intended by the Commission.

6. Often this occurs months before the publication of the advertisement, and the same advertisement may be used for years.