Pay-Per-Call Rule Review: Response to Notice of Proposed Rulemaking: 16 C.F.R. Part 308, FTC File No. R611016 #23

Submission Number:
Sprint Corp
Initiative Name:
Pay-Per-Call Rule Review: Response to Notice of Proposed Rulemaking: 16 C.F.R. Part 308, FTC File No. R611016
Matter Number:


Before the
Washington, D.C. 20580

Pay-Per-Call Rule Review

FTC File No. R611016


Sprint Corporation ("Sprint"), on behalf of its local, long distance and wireless divisions, submits its comments in response to the Commission's proposed revision of its "900-Number Rule" in the Notice of Proposed Rulemaking {"NPRM"}, released October 23, 1998.


In announcing its proposed revisions to its 900 Number Rule, the Commission noted that, while the existing Rule has virtually eliminated consumer abuses in the 900 industry, there are increasingly numerous complaints about other types of audiotext services. These services involve 800 numbers, international numbers or other dialing patterns that do not use the 900-number prefix. In addition, "[m]any... agencies also have been receiving complaints from consumers who have discovered unexplained monthly recurring charges on their telephone bills for services that were never authorized, ordered, received, or used [i.e. cramming]" (Pay-Per-Call Rule at 7-8). In its review, the Commission has proposed revisions to address such serious abuses.

Sprint, of course, recognizes the seriousness of the abuses that the Commission has identified and fully shares the agency's goal of eliminating such abuses. However, there are several areas in which the thrust of the Commission's remedies -- as set forth in the statement of its Rule -- are less than entirely clear, where questions therefore remain, and where further clarification would appear to be advisable.

Specifically, Sprint is not completely certain as to what measures the Commission is proposing to eliminate the abuses that presently exist in the provision of international audiotext services. International audiotext obviously presents a difficult problem. The United States has no jurisdiction over the provider of the audiotext service itself or even over the foreign carrier that delivers the message to the audiotext provider. This lack of jurisdiction is hardly accidental. Abusive providers have deliberately moved offshore in a conscious attempt to avoid such jurisdiction. Since the call from the United States is provided at ordinary international long distance rates, the U.S. carrier would typically have no knowledge of what is happening at the foreign end. It would not know of the arrangements between the foreign carrier and an audiotext provider or even be aware that audiotext service is being provided. Sprint does not believe that the Commission intended to regulate U.S. international carriers in the provision of basic transmission service or the collection of tariffed charges for such service. Such an effort by the Commission would clearly be an extension of its regulatory authority into an area long occupied by the Federal Communications Commission and well beyond what Congress intended. This extension would also be disastrous as a policy matter.

Sprint also addresses below several provisions of the Commission's rule on "cramming." Here again, it bears emphasis that Sprint is entirely sympathetic to the Commission's objective of curtailing "cramming." Sprint's local division, as a billing and collection agent, has, on its own initiative, instituted a number of practices aimed at curbing the very types of cramming abuses delineated in this proceeding. Nevertheless, some specific cramming provisions in the proposed Rule raise questions on which Sprint seeks clarification.

Moreover, in adopting rules against "cramming," the Commission should bear in mind that the Federal Communications Commission is currently engaged in the creation of rules that, to some extent, mirror some of the proposals made in this docket.(1) Duplication of regulations would not only be counterproductive for the agencies involved, but also burdensome for the regulated entities.


The Commission Should Make Clear that Its Proposed Rule Will Not Regulate Basic Transmission Services Provided by U.S. International Carriers Section 308.2(t) of the proposed rules defines the term "vendor" as "any person who sells or offers to sell a pay-per-call service or who sells or offers to sell goods or services via a telephone-billed purchase." Importantly for international communications common carriers like Sprint, the proposed rule also provides that "A person who provides only transmission services or only billing and collection services shall not be considered a vendor."

Sprint understands the proposed definition to mean that a regulated common carrier such as Sprint, to the extent it serves only as a conduit for intelligence imparted by others, see United States v. Southwestern Cable Co., 392 U.S. 167, 170 at n. 29 (1968), provides only transmission services.(2) As such, the common carrier would not be a "vendor" under the proposed rules.

Sprint also understands that a common carrier's receipt of payment from its customers for the provision of transmission service would not cause the common carrier to be classified as a "vendor" under the proposed rule. Any other interpretation would mean that the "transmission service" exception was only available to entities that provided such service without charge. This would be nonsensical, for it would render the exception superfluous.

Sprint further understands the proposed definition of a "billing entity" in Section 308.2(a) to exclude common carriers like Sprint because an ordinary toll telephone call carried by Sprint is not a "telephone billed purchase." Local exchange telephone services and interexchange telephone services are categorically excluded from the definition of a "telephone billed purchase" by proposed Section 308.2(q)(2).

Finally, it is clear that Sprint is not a "service bureau" when providing international common carrier service because the Commission has categorically excluded common carriers from the definition of a service bureau when the carrier does nothing more than provide vendors of pay-per-call services with access to telephone service. 63 FR at 58541. Because it is not a "vendor", a "service bureau," or a "billing entity" when it provides international common carrier telecommunications service, it appears to Sprint that the proposed rules would have little direct impact on Sprint's provision of that service.

Any Attempt to Include the Provision of Ordinary International Telephone Service by U.S. International Common Carriers in the Definition of a Pay-Per-Call Service Would Be Arbitrary and Capricious

Despite the Commission's sensible proposal to exempt pure transmission service providers from its proposed rules, there is also language in the notice that could be read as bringing them within the scope of the term "vendor" selling pay-per-call services. The proposed definition of a pay-per-call service implies that Sprint could be a "vendor" if, as described further below, Sprint makes settlement payments to its foreign correspondents in the ordinary course of providing international telephone service if an information or entertainment service provider garners a portion of this payment.(3) Application of the "vendor" definition to U.S. international carriers is irrational as a matter of common sense and is arbitrary and capricious as well.

In order to understand why it would be arbitrary and capricious to burden Sprint and other U.S. international carriers with "vendor" status under these circumstances, it is helpful to understand the international telephone business. As the Commission may be aware, Sprint typically provides international communications with the cooperation of a foreign telephone company or "correspondent." Sprint provides service over half-circuits to the theoretical oceanic midpoint of a communication.

The foreign correspondent then carries the call from that midpoint to its foreign terminus, possibly with the involvement of additional foreign carriers, such as a foreign local exchange telephone company. Thus, for example, a call from Washington, D.C. to Japan might involve Bell Atlantic, Sprint, Sprint's Japanese correspondent Kokusai Denshin Denwa (KDD), and finally, NTT, Japan's dominant domestic telephone company.

For over half a century now, U.S. international common carriers have exchanged message traffic, first telegraph and later telephone, via the "accounting rate" mechanism. Under this system, a U.S. international carrier agrees with its foreign correspondent on the terms for the exchange of traffic, with each minute of traffic billed at a certain rate per minute of traffic. Typically, the rate is expressed in special drawing rights or U.S. dollars.

At the end of every month or every quarter, the carriers offset the minutes of traffic each sent the other. The carrier which sent the excess of traffic (typically the U.S. carrier) compensates the other in an amount ("settlement payment") equal to the number of excess minutes multiplied by one half the accounting rate.(4) Compare Cable & Wireless plc v. FCC, Case No. 97-1612, D.C. Circuit, decided January 12, 1999.

Under the accounting rate system, which includes the vast majority of international telephone traffic between the U.S. and other countries, U.S. international carriers' responsibility for a telephone call ends at mid-ocean. U.S. carriers have neither responsibility for nor knowledge of the use that is being made of a telephone number in a foreign country.

The FCC has found that international settlement rates are far in excess of cost by any reasonable measure. International Settlement Rates, 12 FCC Rcd 19806 (1997), aff'd sub nom. Cable and Wireless plc v. FCC, supra.(5) For this reason, increasing inbound traffic is very lucrative for the foreign correspondent. An entertainment or audio service provider can therefore approach the correspondent and offer to increase incoming traffic from the U.S. by advertising information or entertainment services which will generate additional inbound traffic for the correspondent. Because settlement rates are so generous, the correspondent can easily afford to share a portion of the additional settlement payments generated by the information service provider (ISP) with the latter. The foreign correspondent has no obligation to inform the U.S. carrier that the former has an arrangement with an ISP in that foreign country under which the ISP shares a portion of the settlement payment attributable to calls made to the ISP's telephone numbers. Nor does any U.S. regulatory agency have the jurisdiction to force the disclosure of such information. The U.S. carrier, however, is legally obligated under its operating agreement with the correspondent to make settlement payments on any excess U.S. traffic sent to that correspondent. By making such arrangements with a foreign carrier, an ISP can easily "disguise" its activities as an international telephone call that is indistinguishable to Sprint from any other international telephone call.

To the extent that the Commission would include within its requirements for pay-per-call or telephone billed services international transmission services where no charge other than the applicable country rate is assessed the caller, it would place international communication service providers like Sprint in an impossible position. Because ISPs technically can use any telephone number to provide information or entertainment services, any toll telephone call carried by Sprint has the potential to be a pay- per- call service.(6)

As the Commission itself appears to recognize, 63 FR at 58534, Sprint has no advance knowledge or ability to control how called parties use their telephone service nor any visibility into the arrangements an ISP might have with a foreign correspondent. Yet Sprint would nonetheless be inhibited or prevented from billing and collecting for ordinary toll telephone service while still remaining liable to its correspondent for settlement payments. Congress surely did not intend the gratuitous infliction of financial harm on U.S. carriers that the proposed rule could cause.

The Commission's proposal would thus inflict financial harm on Sprint because of the former's inability to reach the real culprit, the ISP.(7) Perhaps the Commission believes that by inflicting financial harm to the international business of U.S. carriers, the latter will somehow find a way to police the activities of the ISPs. Unfortunately, that is highly unlikely: U.S. carriers have no way of forcing foreign carriers, often monopolists or near monopolists, to do something which would go against the latter's financial interest.(8)

The Commission seeks to temper the potentially sweeping application of its rule through the use of rebuttable presumptions of payment to an ISP. It is, however, as a practical matter impossible for international common carriers like Sprint to rebut the presumptions. The Commission first proposes a rebuttable presumption of remuneration to an ISP "when persons are solicited to call an international telephone number in order to receive audio information or entertainment service that is not specifically related to or dependent on the country where the call supposedly terminates." 63 FR at 58534.

In order to rebut the presumption and protect its interests, Sprint would be forced to police the advertisements of ISPs in order to determine whether a particular number or set of numbers met the Commission's criteria. Sprint would then have to call the foreign numbers to determine whether they were being used by ISPs. The foreign ISP, however, could easily stay one step ahead of Sprint by simply changing the telephone numbers it used. In addition to being burdensome and difficult, such activity would be directly contrary to Sprint's role as a regulated common carrier without any interest in the content of what it carries. Industrial Relocation Service, supra.

The second presumption of remuneration would exist where there is a "sudden and unusual increase in the number of long distance calls to a particular telephone number, or where the number of calls to an information or entertainment number is unusually high." Id. The Commission does not, in enunciating this presumption, specify what might constitute such a "sudden or unusual increase" or what might be an "unusually high" number of calls. In order to rebut the presumption, Sprint would be forced to monitor every telephone number in the world to determine when a particular number was receiving more calls than usual. This would clearly be impossible.(9)

Moreover, a substantial part of Sprint's business consists of selling international minutes on a wholesale basis to resale carriers (resellers) who also compete with Sprint. These resellers often move substantial volumes of traffic on short notice as they seek to minimize the cost of the service they obtain from underlying carriers. Thus, substantial monthly variation in traffic to particular international points is not only common but also expected in the wholesale business.

In order to rebut the presumption, Sprint would have to inquire of its resellers the possible reasons for increases in traffic to particular numbers. The reseller would have no reason to cooperate with Sprint, as it might legitimately fear that Sprint was in actuality trying to steal customers from the reseller.

The third rebuttable presumption exists "when persons are solicited to call one or more specific telephone numbers via a specific common carrier in order to receive audio information or entertainment services." Id. (fn. omitted) A footnote to the presumption specifically identifies the use of 10-XXX or 1010-XXX calling codes as fitting within the presumption. Many resellers use dial-around carrier identification codes (i.e., 1010-XXX) as a marketing strategy to differentiate themselves from their competitors. Here again, Sprint would have to monitor the activities of its reseller customers in order to rebut the presumption notwithstanding the obvious competitive problems of doing so.

The final presumption of remuneration exists "where a provider of audio information or audio entertainment utilizes advertisements that emit electronic signals, including data transmission of computer programs or computer instructions, that can automatically dial a telephone number which will result in charges to a subscriber." Id. Here again, enforcement by Sprint is as a practical matter impossible: any telephone number in the world is capable of being used in the manner described in the presumption, and Sprint would have to monitor how each such number is used in order to rebut the presumption.

(c) Any Attempt to Include Ordinary International Telephone Calls Within the Definition of a Pay-Per-Call Service Would Exceed the Commission's Jurisdiction.

As noted, this expansion of the definition of "pay-per-call services" was plainly not contemplated by the Congress in the Telecommunications Act of 1996. Section 701(b)(1) of that Act states that the term "pay-per-call services" may be extended "to other similar services providing audio information or audio entertainment if the Commission determines that such services are susceptible to the unfair and deceptive practices that are prohibited by the rules prescribed pursuant to section 201(a)."

The discussion of Section 701 in the Joint Explanatory Statement of the Committee of Conference(10) (at p. 203) makes clear that this amendment was designed to close a specific loophole concerning the use of tariffs to evade the section 228 restrictions. Specifically, some ISPs providers were filing tariffs with rates far above the standard interexchange carrier rates.(11)

By advertising a 10-XXX or 1010-XXX dialing sequence, calls would be routed to such information providers by local exchange carriers and the calling party would be charged these higher rates. Generally, the ISP would use an aggregator to bill such higher rates. Thus, the Joint Explanatory Statement of the Committee of Conference explained:

Many information providers have taken advantage of this exemption by filing tariffs--especially for 1-500, 1-700 and 10XXX numbers--and charging customers high prices for the services. This exemption has proven to be a problem because consumers have none of the protections that were enacted as part of the Telephone Disclosure and Dispute Resolution Act (P.L. 102-556). Section 701(b) of the conference agreement closes that loophole.


The Commission's proposed definition of pay-per-call service goes well beyond the closing of this particular loophole and would adversely affect common carriers, such as Sprint, providing regulated international common carrier telecommunications services. Such carriers are not charging "high prices for [information] services." Rather, the prices Sprint and other such carriers are charging are those for standard international voice telephone service.

By proposing to define "pay-per-call services" to encompass services where payments are made to the service provider either "directly or indirectly," the Commission is extending that definition to entities such as interexchange common carriers who have no direct association with such providers. As noted, the Commission

relies upon the authority granted to it under Section 701(b)(1) for its proposal. However, under Section 701(b)(1), the expansion of the definition is limited to "other similar services providing audio information or audio entertainment." The Commission's proposed definition, to the extent it would include common carrier communications services, goes well beyond "other similar services providing audio information or audio entertainment." Common carrier service is not "similar" to an audio information or audio entertainment service.

Further, Section 701 permits the Commission to prescribe rules if services are "susceptible to unfair and deceptive practices" in violation of Section 201(a) of Telephone Disclosure and Dispute Resolution Act. Section 201(a) is also limited to providers of pay-per-call services. For example, "Advertising Regulations" directs the Commission to prescribe rules with which "the person offering such pay-per-call services" (Sec. 201(a)(1)) must comply. Similarly with respect to "Pay-per-call Service Standards," Section 201(a)(2) states that "[t]he Commission shall prescribe rules to require that each provider of pay-per-call services" perform certain functions or provide certain information. Section 201(a)(3) applies to "a common carrier that provides telephone services to a provider of pay-per-call services."

International telecommunication service providers like Sprint do not "provide telephone services" to international audiotext providers and are not offering or providing pay-per-call services. Service is provided only to the customer who places the call. As with almost every international call, the call is terminated by the foreign correspondent. International calling is clearly very different from the provision by common carriers of 900 service to the provider of pay-per-call services. Thus, there is nothing in either Section 201(a) or in the Joint Explanatory Statement which permits the extension of the definition of "pay-per-call services" to interexchange carriers having no direct relationship with the pay-per-call provider.

Sprint believes that, notwithstanding the difficulties inherent in trying to regulate the conduct of foreign entities over which the Commission has no jurisdiction, the problems created by international ISP providers will lessen over a relatively short time. The primary economic incentive to engage in such activities is settlement rates that are far above cost. The FCC has required U.S. carriers to negotiate cost-oriented settlement rates with their correspondents over the next three years. International Settlement Rates, supra. If negotiations fail, the FCC has indicated that it will prescribe the amounts that U.S. carriers may pay their correspondents for terminating U.S. calls abroad.

As settlement rates approach cost and as competition in international communications increases, it will become less and less lucrative for both ISPs and foreign telephone companies to engage in the abusive activities which have caused the Commission concern. Rather than attempt to regulate activities occurring in foreign countries over which the Commission lacks jurisdiction, Sprint believes the Commission should instead support, as Sprint has, the FCC's efforts to lower international settlement rates.


§ 308.17 Express authorization required

Any telephone-billed purchase, other than a pay-per-call purchase that is blockable pursuant to 47 U.S.C. 228(c), requires the express authorization of the person to be billed for the purchase. It is a deceptive act or practice and a violation of this Rule for any vendor, service bureau, or billing entity to collect or attempt to collect, directly or indirectly, payment for such a telephone-billed purchase where the vendor, service bureau, or billing entity knew or should have known that the charge was not expressly authorized by the person from whom payment is being sought.

Sprint is quite concerned with protecting its customers from fraudulent billing. In its billing and collection contracts with vendors, Sprint insists that all charges passed to it for billing must be accurate and authorized charges. Furthermore, to the extent the vendor is found to be engaging in deceptive practices, Sprint retains the right to cancel the contract.

But these measures do not give Sprint control of the activities of the vendors on whose behalf it bills. A test as to when an entity will be held responsible for matters it "should have known" would normally be applied only in situations where an entity has a high degree of knowledge over the actions of another party, as, for example, in an employer-employee relationship. But when Sprint acts as a billing entity it has no knowledge of the arrangements between a vendor and its customer. Sprint only knows what the customer or the vendor conveys to Sprint. And, consequently, under ordinary circumstances it either knows or it does not know about a specific charge, because it is either told or not told. It is difficult to foresee instances where the "should have known" test would be helpful and Sprint is concerned that the use of this test will cause more confusion than it is worth.

At the very least, if the Commission insists on applying the "should have known" standard to billing entities, it would be helpful if the agency explained, with some degree of precision, the circumstances in which it will be found that a billing entity "should have known" that a particular charge was not expressly authorized. Consider one particular problem: A customer challenges a vendor's charge for a service that is alleged to be "crammed." Sprint consults with the vendor and then removes the charge. The vendor (whether in the next month's bill or several months thereafter) again seeks to have Sprint recover this same charge (with a new date for the second attempt) from the customer. Sprint's billing systems will not alert it to the fact that the same charge is again being sought from the customer so it has no actual knowledge that this is what is happening. Sprint believes that it would be unfair for the Commission to find in this situation that Sprint "should have known" that the charge was improper and that notwithstanding Sprint's lack of knowledge it is nevertheless liable for an improper action. Unfortunately, unless the Commission explains what it will do in this situation, Sprint cannot have any assurance that it will not be held responsible.

§ 308.20(c) Dispute resolution procedures

To be guaranteed the protections provided under § 308.20, a customer shall initiate a billing review with respect to a telephone-billed purchase by providing the billing entity with notice of a billing error no lather than sixty (60) days after the billing entity transmitted the first billing statement that contains the disputed charge...

At page 73 of its Rule record, the Commission notes that, in order to enable customers to report billing errors easily, it is proposing a revision to the Rule that places on the billing entity the burden to receive customer complaints and then investigate to determine if, in fact, a billing error has occurred. Sprint is certainly not opposed to the Commission's efforts to facilitate the customer's ability to correct billing discrepancies. Through the operation of its local telephone division, Sprint is well aware of the frustration experienced by customers with billing questions and concerns. While it is, and will continue to be, the Sprint LECs' practice to assist customers in any way possible to resolve billing inquiries, Sprint does not believe the proposed Rule is in the customer's best interest.

Requiring the billing entity to investigate and resolve all alleged errors will add little but time and more frustration to the process. Unless the service provider contracts with the billing agent to provide the "inquiry service"(e.g., the ability to take complaints and resolve them without contacting the service provider in advance), the billing agent will not have the detail required to investigate or resolve the customer's complaint. Consequently, it will have to take the customer's call, then call the service provider to relay the customer's complaint. It will gather information from the service provider and call the customer back. If the customer has questions on the information gathered, a second call to the service provider will be required, as well as yet another call back to the customer. Even if the complaint is resolved, the customer has, in the interim, become even more frustrated, and the relationship between the customer and the service provider, as well as the relationship between the customer and the billing agent has, given such frustration, become increasingly strained.

It is for this very reason that many of Sprint's billing and collection customers generally prefer to conduct their own customer inquiry service directly with the vendor. The service provider, unlike the billing agent, can explain how its products work and how its services are rated. It can work with the customer to find the best services to meet his or her needs. And it can do so, many times, in a single telephone call.

It is in everyone's interest to ensure that the customer is cared for appropriately. The Commission should not interfere with the customer -- service provider relationship by requiring a third party to interface with the customer regarding possible billing errors in the first instance.(12)

Sprint believes it more appropriate to allow the service provider to decide how to best interact with its customers and then to provide a customer inquiry telephone number next to the service provider's name on the telephone bill (as provided for in proposed § 308.18(d)). In this way, the customer can quickly and easily determine where to call with billing or service questions. Only if the customer cannot resolve the dispute with the vendor itself should the customer notify the billing entity that a problem exists.

§ 308.20(c)(3)(i) Dispute resolution procedures

The action required by § 308.20(c)(2) shall be taken no later than sixty (60) days after receiving the notice of the billing error and before taking any action to collect the disputed amount, or any part thereof. After complying with § 308.20(c)(2), if the billing entity has determined that any disputed amount is in error, or has for other reasons determination not to sustain the disputed charge, the billing entity shall within thirty (30) days of such determined, notify the appropriate providing carrier, vendor, or service bureau as applicable, of its disposition of the customer's billing error and the reasons therefor, and provide sufficient information for the appropriate entity to identify the customer account at issue.


If a customer fails to pay for a telephone-billed purchase and fails to initiate a billing review within the sixty- (60) days provided under § 308.20(a), the billing entity that transmitted the first billing statement containing the unpaid charge shall, no later than one hundred and twenty (120) days after such statement was transmitted, provide the vendor or service bureau with:

(i) notice of the failure to pay;
(ii) the amount of the unpaid charge; and
(iii) sufficient information to identify the customer's account.

The Commission's objective in making this proposal is to provide the vendor with "timely information needed to initiate collection on [its] own…" (at p. 78). While this goal is commendable, the practical effect of adopting this Rule would be for the Commission to dictate the LEC's collection policies and its relationship with its customers. Sprint certainly understands the vendors' need to have billing information in a timely fashion and, via its billing and collection contracts, it sets forth specific timetables for transmitting information to the vendors. These timetables are properly the subject of the contract negotiation process. There is nothing that suggests that the vendor will be unable to protect itself, and there is accordingly no need for the Commission to insert itself into contractual relationship between two private business parties.


The Commission has correctly identified several problems concerning cramming and international audiotext traffic. The problem outlined regarding international traffic is difficult to cure because the perpetrators consciously place themselves outside of the jurisdiction of U.S. agencies and in fact, are dealing exclusively with carriers which are likewise outside the agencies' jurisdiction. The bad news, therefore, is that the Commission has no easy way to cure the abuses described here on an immediate basis. Moreover, trying to hold U.S. carriers providing tariffed, international service responsible for violations of which they have no knowledge nor any control over would create additional problems without solving the existing problem. The good new is that, as settlement rates come down, the ability of ISPs operating overseas to engage in these types of activities will be continuously diminished. And, as the settlement rates approach costs, should disappear entirely.

While Sprint generally agrees with the Commission's regulations on cramming, there are areas that require clarification, specifically:

the "should have known" test enunciated in proposed rule 308.17 is inapplicable in the situation where a local carrier acts as a billing agent has no knowledge of billing disputes other than what the vendor or customer imparts to them;
similarly, because a local carrier acting as a billing agent does not have knowledge of a dispute between the customer and the vendor, it would make far more sense to have the customer go to the vendor in the first instance and inform the LEC only if the dispute cannot be resolved with the vendor;
to conform with the typical monthly billing cycle, Sprint suggests that the Commission extend the 30-day notification period provided for in proposed rule 308.20 (c)(3)(i) to a minimum of 45 days; and
Sprint believes that it is unnecessary under the circumstances to set a deadline for providing "timely information" to the vendor - - as explained above, the vendor should be able to protect itself in contractual relationships just as any other businessperson would.

Respectfully submitted


By: "signed" Jay C. Keithley
Jay C. Keithley
Leon M. Kestenbaum
Marybeth M. Banks
Kent Y. Nakamura
1850 M Street, NW, Suite 1100
Washington, DC 20036
PH: (202) 857-1030

Sandra K. Williams
4220 Shawnee Mission Parkway
Suite 303
Fairway, KS 66205
PH: (913) 624-1200

Its Attorneys

March 10, 1999

1. See, In the Matter of Truth-In-Billing and Billing Format, CC Docket No. 98-170, Notice of Proposed Rulemaking released September 17, 1998.

2. Like the Commission, Sprint is aware of entities that try to disguise their true status as information or entertainment service providers by adopting the trappings of common carriers. Such entities might, for example, obtain U.S. certificates of public convenience and necessity and file tariffs with the FCC. These "carriers," who previously established an information or entertainment operation in another country, will then attempt to persuade U.S. consumers to dial particular foreign numbers at high tariffed rates. Because these entities which are transmitting the call also provide or have an interest in the content of the material transmitted -i.e. the entertainment or information which is provided the consumer- they are not providing only transmission service and are therefore not common carriers. See Industrial Relocation Service 5, FCC 2d 197 (1966) and U.S. v. Southwestern Cable Co., supra.

3. The proposed definition "is designed to bring within its reach any audio information or entertainment service, accessed by dialing any telephone number or receipt of any telephone call, where all or a portion of the charge paid by the consumer 'results in payment, either directly or indirectly, to the person who provides or purports to provide such information or entertainment service.'" 63 FR 58533-34 (fn. omitted).

4. The settlement rate is equal to one half of the accounting rate.

5. International settlement rates in excess of $1.00 a minute are still common. Settlement rates generally are so high and constitute such a large subsidy from U.S. ratepayers to foreign countries that the FCC has required U.S. carriers to negotiate settlement rates that comply with certain settlement rate benchmarks it has established.

6. Of course, any toll telephone call has the potential to be a pay-per-call service as well. However, because the U.S. has plenary jurisdiction over domestic calls that originate and terminate within its borders, it does not require the involvement or cooperation of other countries to achieve a complete regulatory solution to the problems posed by such calls.

7. The Commission would accomplish this result by making it difficult or impossible for Sprint to collect what for all intents and purposes appear to be legitimate, "garden-variety" international telephone calls.

8. The ISP might make its revenue sharing arrangement with a foreign carrier other than Sprint's foreign correspondent, such as a foreign local exchange carrier that interconnects with the foreign correspondent. In that case, the foreign correspondent would be unaware of the ISP's activities as well.

9. A death of a prominent member of a large, extended family, for example could result in a flurry of telephone calls from the U.S. to a particular foreign number. Surely the Commission cannot reasonably ask Sprint to oversee obituaries in foreign countries.

10. Conf. Rep. No. 104-458, 104th Congress, 2d Session, January 31, 1996.

11. As noted above, an ISP's attempt to take on the trappings of a common carrier by obtaining a certificate of public convenience and necessity and by filing tariffs is not legitimate, for common carriers have no interest in the content of a customer's calls.

12. As noted earlier, the FCC, through its Truth-In-Billing docket, is currently considering rules that speak to the problem of cramming. It is worthy of note that the FCC's proposed rules, if adopted, would require the ILEC to list on the billing statement the names and contact numbers of each service provider listed on the customer's bill. The FCC is clearly trying to promote a direct relationship between the service provider and the customer, whereas this Commission's proposed rule would work against that goal by inserting a third party into the relationship.