Calling Party Pays Service Option in the Commercial Mobile Radio Services

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 20, 22, 24, and 90

[WT Docket No. 97-207; FCC 97-341]

Calling Party Pays Service Option in the Commercial Mobile Radio

Services

AGENCY: Federal Communications Commission.

ACTION: Request for comments.

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SUMMARY: The Commission adopts a Notice of Inquiry (NOI) in this

proceeding, seeking comment to establish a record Calling Party Pays

(CPP), a service currently offered by some Commercial Radio Service

(CMRS) providers. The goal of this proceeding is to determine whether

the wider availability of CPP would enable CMRS providers to more

readily compete with wireline services provided by Local Exchange

Carriers (LECs) and to determine whether there are any actions that the

Commission could take to promote the wider availability of CPP for CMRS

providers. The purpose of this inquiry is to explore means of

encouraging and facilitating competition in the local exchange

telephone market.

DATES: Comments are due on or before December 1, 1997, and reply

comments are due on or before December 16, 1997.

ADDRESSES: Federal Communications Commission, Office of the Secretary,

Room 222, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Dr. Pamela Megna or Dr. Joseph Levin,

Policy Division, Wireless Telecommunications Bureau (202) 418-1310.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's

Notice of Inquiry in WB Docket No. 97-207, FCC 97-341, adopted

September 25, 1997, and released October 23, 1997. The complete text of

this NOI is available for inspection and copying during normal business

hours in the FCC Reference Center (Room 239), 1919 M Street, N.W.,

Washington, D.C., and also may be purchased from the Commission's copy

contractor, International Transcription Services, (202) 857-3800, 1231

20th Street, Washington, DC 20036.

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Synopsis of Notice of Inquiry

1. The Commission initiates this Notice of Inquiry (NOI) to seek

information regarding Calling Party Pays (CPP), a service option

currently offered by some Commercial Mobile Radio Service (CMRS)

providers. The purpose of this inquiry is to explore means of

encouraging and facilitating competition in the local exchange

telephone market. The NOI is intended to explore the subject of CPP to

develop a record for determining whether the wider availability of CPP

would enable CMRS providers to more readily compete with wireline

services provided by Local Exchange Carriers (LECs) and to determine

whether there are actions that the Commission could take to promote the

wider availability of CPP for CMRS providers.

2. CPP is a service option that some CMRS providers offer whereby

the party placing the call or page pays the airtime charge, and any

applicable charges for calls transported within the LECs' Local Access

and Transport Areas. In order for a CMRS provider to offer this service

option, the LEC must be willing and able to provide the CMRS carrier

with this billing service or sufficient information for the CMRS

carrier to bill the calling party directly.

3. In this proceeding, the Commission seeks information regarding,

among other issues, the current availability of the CPP service option,

how the calling party is informed of charges that will be incurred, the

magnitude of these charges, what technical and contractual requirements

are needed to implement this service option, whether there are

technical, regulatory, or other barriers impeding the availability of

this service option, and whether there are pro-competitive reasons for

the Commission to initiate any actions to encourage the availability of

this service option.

Current Availability of CPP

4. Although some LECs currently offer a CPP service option to CMRS

carriers, it is unclear how many mobile carriers offer the CPP service

option to their subscribers. Moreover, outside the United States, CPP

seems to be the prevalent billing system for mobile telephony. Thus,

the Commission seeks information on which carriers offer the CPP

service option, in which geographic markets consumers have the service

option, details of the arrangements between LECs and CMRS carriers and

between CMRS carriers and subscribers, any regulatory requirements

imposed by the various States and consumer reaction to the service

option. The Commission seeks comments addressing any additional issues

that may be associated with applying CPP to a calling party originating

a call to a wireless phone from a wireless phone. The Commission also

seeks comment as to the reasons CPP is not offered more broadly.

5. The Commission seeks comment on the level of consumer demand for

CPP. Commenters are requested to address whether the market has failed

to accommodate consumer demand for this or other service options and is

likely to in the future. Commenters should provide detailed information

on the specific technical, regulatory, or economic barriers that exist,

and what actions, if any, the Commission should take to remove these

barriers, in the event that the Commission decides that enhancing

access to CPP is an appropriate pro-competitive goal.

6. Parties should also comment as to whether recent developments,

including increased competition in the CMRS market, the related

decrease in CMRS rates, and the implementation of reciprocal

compensation for LEC-CMRS interconnection arrangements, will create

sufficient market incentives for CMRS carriers to refrain from charging

their own subscribers for incoming calls. To the extent that CPP is

offered in a manner that requires the incumbent LEC to pay carrier to

carrier airtime charges to complete a call, CPP and reciprocal

compensation may address a similar issue (i.e. how the CMRS provider

recovers the cost of completing a call that did not originate on the

CMRS network). Parties are asked to comment on whether reciprocal

compensation may obviate or reduce the need for CMRS providers to

implement CPP.

Demand Stimulating Effects

7. The Commission seeks comment on current traffic patterns in the

United States, and in countries in which CPP is the norm, and on

whether CPP promotes more balanced traffic flows and increased demand

for CMRS services.

8. It is uncertain, however, whether the balance in incoming and

outgoing traffic reported in other countries is due to CPP service or

due to other factors. Wireless service may be more desirable in these

countries because the wireline network may be inferior in quality or

less accessible. Alternatively, the increase in traffic terminating on

a wireless network in these countries could be the result of an

increase in subscribers' willingness to keep their wireless phones

turned on due to the wider use of digital phones with their longer

battery lives. The Commission seeks comment on these issues and

requests any empirical studies that attempt to isolate the effect of

CPP from other variables. In particular, the Commission seeks

information on the pricing of wireless and wireline service in those

countries in which CPP is the norm, and requests parties to submit any

empirical studies or information addressing these issues.

9. In addition some industry sources believe CPP can increase the

demand for CMRS services by increasing the minutes of usage or by

increasing the number of subscribers. The Commission requests any

empirical studies that have documented the effects of CPP on

subscribership, traffic patterns (including traffic between wireless

and wireline networks), and minutes of use in the markets in which CPP

has been implemented. The Commission also seeks information regarding

the possibility that CPP could in some way alter the peak usage periods

of the wireline telephone network, thus requiring network

modifications.

10. The Commission also seeks comment on the availability of the

service option whereby Wireless subscribers do not pay for the first

minute of calls they receive. The Commission seeks any empirical

studies and information on whether this service option encourages

consumers to subscribe to mobile telephony services, to subscribe to a

digital system, to disclose their mobile telephone number, and to keep

their mobile telephone in an active operational mode. Further, the

Commission seeks comment regarding whether use of the ``first incoming

minute free'' option more evenly balances traffic to and from wireless

networks and whether it would have an effect on the demand for CPP.

Pricing Issues

11. The Commission also seeks information on the pricing structure

of CMRS and wireline services across the United States and in other

countries. The pricing structure implicit in a CPP service is

significantly different than the typical pricing structure for CMRS and

local wireline service in the United States. The differences in pricing

between local telephone service and the CPP service option could deter

some calls from wireline to mobile subscribers and may hinder efforts

to minimize distinctions between telephony service provided on wireline

and wireless networks. Widespread use of CPP could decrease the extent

to which some consumers view CMRS and wireline telephony as close

substitutes because the wireline consumer's incremental cost to place a

local call to a CMRS phone could significantly

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increase while there would be no similar change in the consumer's

incremental cost to place a local wireline call. The Commission also

seeks information on the proportion of wireline subscribers electing

measured local service, and estimates of the potential demand for this

option among wireline subscribers, as well as price information for

measured local calls and CPP calls, and whether they vary based on time

of day or some other factors. In addition, the Commission seeks

comments concerning the extent to which differences in prevailing rate

levels between wireline and wireless service offerings may affect the

relative demand for these services, as well as traffic balances between

wireline and wireless networks.

12. Finally, the Commission seeks comment on whether there are fees

associated with reprogramming CMRS phones and whether there are monthly

charges for CPP. The Commission also requests information regarding the

amount of these fees or monthly charges, and whether the rate the

calling party is charged varies across markets and the time of day.

Consumer Protection Issues

13. Many State regulatory agencies and consumer groups have raised

consumer protection issues related to informing callers that they will

be charged a fee for placing a call to a CMRS phone, and informing

callers of the magnitude of the charge. Therefore, the Commission seeks

information regarding how the calling party can best be informed of

charges for calls to CMRS phones, including the magnitude of these

charges. The Commission also seeks comment on what technical and

contractual capabilities are needed to inform the caller regarding his

or her responsibility to pay for the call and regarding the amount of

the charge for the call.

14. Finally, the Commission seeks comment on whether it would be in

the public interest for the Commission to assist the telecommunications

industry and the States to develop a uniform national method to inform

the calling party of the magnitude of the charge, and of the calling

party's responsibility to pay for the call. Commenters are also

requested to suggest any alternatives to a uniform national approach

that would be in the public interest.

Technical Issues

15. It appears that the CPP service option requires various

infrastructure, contractual, and billing collection modifications that

may limit its implementation in the United States. While the mobile

carrier must have access to billing collection information for the

calling party to be able to charge incoming calls to the calling party,

this information may be unavailable in some circumstances and may

result in uncollectible revenues for the CMRS carrier. The Commission

seeks comment on these assumptions and issues, and on any steps that

could be taken to address these concerns and impediments to the

operation of CPP.

16. In addition, not all LEC networks currently appear to have the

technical capability to exchange the billing information required for

CPP. Moreover, the use of call branding 1 as part of a CPP

service option may not always be possible. The Commission seeks comment

on these technical issues, and on what the Commission, the States, or

the industry could do to resolve them.

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\1\ Branding, in this context, is the ability to inform the

caller to a CMRS phone (by use of a recorded intercept message) of

additional charges applicable to the call.

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17. Finally, there are means available to give the called CMRS

subscriber using CPP the option to pay for incoming calls in some

circumstances. The Commission seeks comment on the technical

requirements for this option to be deployed, where this option is

currently available, and how the calling party and called party are

informed of this additional option.

Legal Issues

18. The Commission also seeks comment regarding any legal issues

that may be posed by any actions the Commission may take regarding

imposition or implementation of CPP.

19. As a threshold matter, the Commission recognizes that we have

stated in the Arizona Decision, in the context of ruling on whether a

State had made a sufficient showing within the meaning of section

332(c)(3)(B) of the Communications Act 2 that it should be

permitted to regulate the rates of CMRS providers, that regulation of

CPP was a billing practice that may be regulated by a State as a term

or condition under which service is provided. 3

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\2\ 47 U.S.C. 332(c)(3)(B).

\3\ Petition of Arizona Corporation Commission To Extend State

Authority Over Rate and Entry Regulation of All Commercial Mobile

Radio Services and Implementation of Sections 3(n) and 332 of the

Communications Act, PR Docket No. 94-104 and GN Docket No. 93-252,

Report and Order and Order on Reconsideration, 10 FCC Rcd 7824, 7837

(1996) (Arizona Decision).

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20. In the wake of the Arizona Decision, the Commission has made

clear, in the Local Competition First Report and Order,4

that incumbent LECs have an obligation to provide access to unbundled

network elements, and that such network elements include information

sufficient to enable recipients of the unbundled network elements to

provide billing services. In addition, the Eighth Circuit Court of

Appeals, in its Iowa Utilities Board decision, concluded that the

Commission has authority to order LECs to interconnect with CMRS

carriers and has the authority to issue rules of special concern to

CMRS providers.5

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\4\ 61 FR 45476, August 29, 1996.

\5\ Iowa Utilities Board, 1997 WL 403401 (8th Cir., July 18,

1997), at n.21.

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21. In light of the Local Competition First Report and Order and

the Iowa Utilities Board decision, the Commission seeks comment

regarding the scope of our authority to require LECs to provide billing

information and services which will enable CMRS providers to offer CPP

services. Specifically, the Commission seeks comment on whether we have

authority under section 332 to establish requirements regarding CPP

arrangements between LECs and CMRS carriers. The Commission requests

any commenters suggesting that the Commission lacks authority under

section 332 to identify any other provision of the Communications Act

that gives the Commission authority over CPP arrangements. Commenters

should also address whether that provision would give us the authority

to preempt State regulation in order to establish nationwide rules for

CPP.

Procedural Matters

22. The Commission adopts this Notice of Inquiry under the

authority contained in sections 4(i), 4(j), and 403 of the

Communications Act of 1934, 47 U.S.C. 154(i), 154(j), 403. Pursuant to

applicable procedures set forth in Secs. 1.415 and 1.419 of the

Commission's Rules, 47 CFR 1.415, 1.419, interested parties may file

comments on or before December 1, 1997, and may file reply comments on

or before December 16, 1997.

23. To file formally in this proceeding, you must file an original

and five copies of all comments, reply comments, and supporting

comments. If you want each Commissioner to receive a personal copy of

your comments, you should file an original and ten copies. Comments and

reply comments should be sent to the Office of the Secretary, Federal

Communications Commission, Washington, D.C. 20554. Comments and reply

comments will be available for public inspection during regular

business hours in the FCC Reference Center (Room 239) of the Federal

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Communications Commission, 1919 M Street, N.W., Washington, D.C. 20554.

24. There are no ex parte or disclosure requirements applicable to

this proceeding pursuant to Sec. 1.1204(a)(4) of the Commission's

Rules, 47 CFR 1.1204(a)(4).

List of Subjects 47 CFR Parts 20, 22, 24, and 90

Radio.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 97-28762 Filed 10-29-97; 8:45 am]

BILLING CODE 6712-01-P