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FCC Modifies Carrier Change Rules

As part of the Federal Communications Commission's (the "Commission" or the "FCC") biennial regulatory review, the Commission adopted on May 15, 2001 new carrier change rules (47 U.S.C. - 258(a); Telecommunications Act of 1996.) in a Report and Order (In the Matter of 2000 Biennial Review - Review of Policies and Rules Concerning Unauthorized Changes of Consumers Long Distance Carriers, CC Docket No. 00-257; Implementation of Subscriber Carrier Selection Changes Provisions of the Telecommunications Act of 1996, CC Docket No. 94-129; Policies and Rules Concerning Unauthorized Changes of Consumers Long Distance Carriers; First Report and Order in CC Docket No. 00-257 And Fourth Report and Order in CC Docket No. 94-129; Adopted: May 7, 2001; Released: May 15, 2001., www.fcc.gov/Bureaus/Common_Carrier/Orders/2001/fcc01156.txt), to applicable situations involving the carrier-to-carrier sale or transfer of subscriber bases that intends to ease the process for acquiring carriers. The new rules became effective June 21, 2000. Under the Commission's carrier change authorization and verification rules in effect prior to June 21, 2001, 47 C.F.R. - 64.1100 et seq., a carrier must receive individual subscriber consent before a carrier change may occur. These rules are intended to prevent "Slamming," the practice of switching a telephone subscriber's long distance provider without first obtaining a subscriber's knowing authorization. When a carrier acquires another carrier, the process for obtaining each individual subscriber's consent pursuant to the FCC's carrier change rules is a very time consuming and expensive. Consequentially, carriers generally have sought a waiver of the carrier change authorization and verification rules to effect the carrier-to-carrier sale or transfer of a subscriber base without obtaining individual subscriber consent. The FCC's Common Carrier Bureau (the "Bureau") routinely granted such requests, but it is a burdensome process and carriers are not able to predict with certainty the amount of time it will take to receive a Bureau decision on their waiver requests. The FCC is also burdened with processing waiver requests.

Against this background, the Commission amended section 64.1120 of its rules, 47 C.F.R. - 64.1120, by adding a new subsection (e). The new amended rule establishes a self-certification process for carrier-to-carrier sale or transfer of subscriber bases, thereby eliminating the need for a carrier to obtain a waiver of Commission rules prior to closing a transaction.

Under the new rules, carriers can make carrier-to-carrier sales or transfers of subscribers bases, provided that, not later than 30 days before the planned carrier change, the acquiring carrier notifies the Commission, in writing, of its intention to acquire the subscriber base and certifies that it will comply with the required procedures, including the provision of advanced written notice to all affected subscribers.

This notice to the FCC can be made by simply filing a letter in CC Docket No. 00-257 with the Secretary of the Commission. The letter must include (1) the names of the parties to the transaction, (2) the types of telecommunications services provided to the affected subscribers, (3) the date of the transfer of these subscribers to the acquiring carrier, (4) a certificate of compliance with the requirements of this process, typically signed by an officer or designated person on behalf of the company, and (5) an attached copy of the notice sent to the affected subscribers. In the event of any material change to this required information, the acquiring carrier must file a written notification of the changes with the Commission no more than 10 days after the transfer date designated in the prior filing.

Carriers acquiring subscribers have the responsibility to also provide those subscribers with reasonable advanced written notice of a carrier change associated with a sale or transfer. This notice to subscribers must occur not later than 30 days before the planned carrier change. The notice must inform the customer of:

1. The date on which the carrier will become the subscriber's new provider of telecommunications service;

2. The rates, terms, and conditions of the service(s) to be provided by the acquiring carrier;

3. The fact that the acquiring carrier will be responsible for any carrier change charges associated with the transaction;

4. The subscribers right to select a different preferred carrier, if an alternative carrier is available;

5. A toll-free customer service telephone number for inquiries about the transfer;

6. The fact that all subscribers receiving the notice, including those who have arranged preferred carrier freezes through their local service providers, will be transferred to the new carrier if they do not select a different preferred carrier before the transfer date, and that the customer will again have to arrange for new freeze protection after the transfer with its local service provider;

7. Whether the acquiring carrier will be responsible for resolving outstanding complaints against the selling or transferring carrier. (The Commission declined to require acquiring carriers to handle outstanding complaints against the selling or transferring carrier.)

While not required, a carrier may state in its notice to an affected term contract subscriber that the subscriber may face termination penalties if the subscriber selects another carrier prior to the expiration of the term contract, if that is the case.

The Telecommunications group offers a comprehensive telecommunications industry practice, with nationally and internationally recognized experts in the field of telecommunications relating to broadcasting, cable, wireline and wireless carriers as well as telecommunications mergers, financings, and acquisitions.

For more information call Michael L. Glaser at (303) 757-1600.

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