The Federal Communications Commission will fight to reinstate its rules restricting the use of customer proprietary network information (CPNI) after the regulations were shot down by a federal appeals court in Denver, FCC Chairman William Kennard said. The commission will reargue its case in front of the full appeals court, rather than seeking an immediate appeal before the U.S. Supreme Court.
At the heart of the case is the extent to which carriers can use customer usage data to market equipment and other products to subscribers. A three-judge panel of the 10th U.S. Circuit Court of Appeals in Denver ruled against the commission 2-1, based on the FCC’s failure to “adequately consider the constitutional ramifications” of its 1998 CPNI rules, the court said. Although the FCC created the regulations to protect consumer privacy, the court ruled that the regulations violate First Amendment protection of “commercial speech” enjoyed by carriers. The court also faulted the commission for failing to justify its “Opt-in” method, which bans the use of customer information unless a customer expressly requests to have it used.
U S West, which sought the ruling, believes that broader use of customer information will lead to fewer unwanted marketing calls. Carriers could market new products “without contacting those whose customer information suggests they may not be interested,” said Mark Roellig, U S West’s executive vice president for public policy.
An FCC official, however, said the ruling could lead to further intrusions into customer privacy and enable carriers to sell CPNI information to other companies interested in the customer data.
Ironically, the commission had relaxed some CPNI rules just days before the court’s decision. It modified rules for storing CPNI customer approval status, no longer requiring that data files indicate approval status within the first few lines. The commission, although still requiring carriers to establish customer approval before using the information, allowed carriers to develop their own procedures for doing so.
With the Denver court’s decision, those rules, too, went out the window, leaving the industry without legal guidelines for the use of CPNI.
Carriers Reach Agreement on Access Reform
Peace may be at hand in the contentious debate between LECs and IXCs over access charges and rate structures, according to a proposal sent to the FCC.
Sprint and AT&T, joined by Bell Atlantic, BellSouth, SBC and GTE hammered out a five-year agreement that restructures the way subsidy collections and access fees are calculated and collected.
The negotiation between carriers, historic in its own right, was an attempt to come up with a plan before the FCC created a funding formula none of them would like, a source familiar with the deliberations said.
The plan, which followed nearly six months of negotiations between local exchange carriers and the interexchange carriers, would shift subsidy collections from long-distance carriers to the LECs, which means the IXCs won’t have to add special charges to their bills to recover those costs.
The agreement would cut access charges from local carriers to $5.6 billion annually, and cut per-minute access charges in half. IXCs pay local carriers for access to their local loops to complete long-distance calls. The plan also calls for combining the subscriber line charge, which the LECs charge to recover the cost of maintaining their networks ($3.50 a month), and the presubscribed interexchange carrier charge (increasing from $1.50 per line to $2 per line next year) into one $5.50 monthly charge. Primary line and secondary line distinctions would also be eliminated.
If the FCC approves it, the structure will go into effect in January.
Not every carrier got what it wanted. “The idea is to move the charges for fixed-cost items [wires] to a fixed charge instead of a per-minute charge,” BellSouth spokesperson Bill McCooskey told BillingWorld as deliberations were under way last month. “We would like to get away from per-minute, period.” But instead of eliminating them, the agreement cuts the per-minute charge in half.
Meanwhile, in an unrelated case, a court ruled against the use of intrastate or international revenue in determining a carrier’s universal service contribution. It also declared that using the flowback method of collecting universal service contributions from access charges is banned by the Telecom Act of 1996.
Canada orders open access tariffs to cable systems
Cable billing companies and ISPs may have to change their billing systems to comply with the Canadian Radio-TV & Telecommunications Commission’s (CRTC) July order that the country’s largest cable operators provide wholesale access to ISPs at a cost-based rate. The CRTC also set new rules for how resale rates are to be constructed.
According to one billing expert, the rules may force changes to cable billing systems. “From a customer care and billing perspective, the effect of giving ISPs access to cable networks will depend on the way in which the ISPs charge their customers,” says Kent A. McIntosh, director of strategic development at Proxima Systems Ltd. Proxima is a cable biller based in Montreal with customers in Canada and Europe. Cable billers can adapt their systems to charge the ISPs several ways. “The cable companies could treat the ISPs as any customer and rate their wholesale usage on a flat-rate basis, or by time, by transmission or on a quality of service basis,” McIntosh says.
The CRTC ruling has been in place since 1996, but July’s order provided a needed kick from the commission to speed things along, according to the Canadian Association of Internet Providers (CAIP). The CRTC also ordered cable companies to file tariffs for high-speed access services.
In the same vein as the U.S. Telecommunications Act of 1996, which grants CLECs and resellers access to ILEC facilities, the CRTC also ordered cable companies to give ISPs access to facilities to interconnect with their networks. Cable operators also must make available to the ISPs Internet Protocol data transmission capabilities they use to provide their own retail-level higher speed information services.
Cable billing systems may have to make changes in their rating functions, because the ruling states that “cable carriers will be required to develop a rate structure that covers both of these functions.”
Unless the ISPs charge a flat rate, McIntosh says, “cable companies will need a system that is able to associate accurate usage costs with the appropriate ISPs and end customers.” For usage-based access, when an ISP’s network is interconnected with cable networks, the ISP would want to track the total usage through each interconnection point to verify and reconcile the incoming usage charges from the cable companies, McIntosh says.
Carriers complain about Truth-in-Billing rules
Wireline carriers have reacted strongly in petitions to the Federal Communications Commission protesting the new Truth-in-Billing guidelines, which the agency ordered to combat cramming and slamming by simplifying phone bills.
MCI Worldcom, in its petition, asked the FCC to dump the rule that carriers must clarify which charges, if left unpaid, would not lead to service cutoff. It said the requirement would “impose enormous new costs on the industry.”
Ameritech Corp. also doesn’t like the idea of defining “deniable” and “non-deniable” charges, and complained to the FCC that it can’t implement the requirement that new service providers be listed on every phone bill, as well as a toll-free contact number for those providers, by the Sept. 6, 1999, deadline. It wants until April 2000 to complete billing system changes to meet the new guidelines.
Other carriers complained about specific language defining line-item charges, which the FCC believes will prevent customers from misinterpreting which charges are federally mandated and which aren’t. The FCC wants specific, “plain English” descriptions of all such fees and surcharges.
The industry also argues that it has already reduced slamming and cramming through its own efforts, and that the new FCC rules are too time-consuming and costly to implement.
The Truth-in-Billing rules, which were to have taken effect July 25, have been postponed until at least Sept. 6, an FCC spokesperson says. The reason for the delay: the Office of Management and Budget rejected the FCC’s proposed information collection procedure.
Not only that, the OMB rejected the FCC’s request for a quick review of its rules. The FCC has resubmitted the rules and again requested fast action, the FCC spokesperson says. Although an indication of how things can be stalled in Washington, the holdup gives billing system developers a little more breathing room to institute changes to accommodate the rules.
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