The Prepaid Press - May 15, 2008 - (Page 6)

PREPAID BUSINESS May 15 · 2008 - 6 REGULATORY RUNDOWN by Ed Maldonado Rules, Bills and Probes, Courtesy of the FCC 1. Fraudulent Wireless 911 calls now under FCC’s eye and rulemaking 2. New Rules likely for Customer Proprietary Information & Retention Marketing 3. Bill proposes elimination of “Common Carrier Exception” to FTC jurisdiction 4. Congressional Probe of FCC cites broken processes under Martin Administration Number Association, the Association of PublicSafety Communications Officials International, the State of Montana 911 Program, the Washington Sate E911 Program, and Openwave Systems, Inc. The Petition cites hard cases of fraudulent 911 calls dating back to as early as 2006. For example, the State of Tennessee reported more than 10,000 fraudulent 911 calls from NSI phones in just a three-month span of time in 2006. In Florida, PSAPs reported at least 8,400 fraudulent 911 calls from NSI phones in the month of December 2006 alone. This constituted more than 96 percent of the 911 calls received by those PSAPs from NSI phones. The FCC rules require wireless carriers to transmit all wireless 911 calls, including those made from NSI phones, to 911 call centers or PSAPs. The FCC notice calls for public comments, analysis and information on the nature and the extent of the problem for PSAPs across the nation in responding to fraudulent calls. Feedback from those in the prepaid wireless industry is encouraged through the FCC’s E-filing Comment System at www.fcc.gov Act of 1930, as amended, by allegedly using, for customer retention marketing purposes, proprietary information of other carriers that it receives in the local number porting process. In its decision, the FCC’s Enforcement Bureau further recommend that the FCC Commission promptly issue a Notice of Proposed Rulemaking (“NPRM”) regarding consumer and competitive benefits of customer retention marketing practices under Section 22(b). Section 222(b) provides that “[a] telecommunications carrier that receives or obtains proprietary information from another carrier for purposes of providing any telecommunications service shall use such information only for such purpose, and shall not use such information for its own marketing efforts.” Section 222(b) thus prohibits a telecommunications carrier from using, for its own marketrecent months, New Jersey and Florida have commenced actions against the prepaid calling card industry as to their transparency in charges and rates to consumers. Illinois has recently placed in law Public Act 095-0525 (Amending Section 5 of the IL Consumer Fraud and Deceptive Business Practices Act) requiring transparency on not only prepaid calling cards, but stored value and gift cards. In the state of New Jersey, the FTC has also begun actions against distributors for advertising and structuring of charges on cards sold to prepaid consumers. Testifying before the Senate Commerce Committee last week, FTC Chairman William Kovacic said that the Common Carrier Exemption is simply “obsolete.” Kovacic testified that the FTC’s position is that “Technological advances have blurred the traditional boundaries between telecommunications, entertainment and high technology,” and “as the telecommunications and Internet industries continue to converge, the common carrier exemption is likely to frustrate the FTC’s ability to stop deceptive and unfair acts and unfair practices and unfair methods of competition.” Those in the prepaid telecommunication industry should carefully keep track of the status of this Bill, as its impact to prepaid calling services (card provider, distributors, VoIP, wireless or otherwise) is likely to be widespread. 1. Fraudulent Wireless 911 calls now under FCC’s eye and rulemaking WASHINGTON, DC (April 11, 2008) The Federal Communications Commission (FCC) has granted a Petition for a Notice of Inquiry filed by the Public Safety Answering Points community, regarding the number of fraudulent 911 calls made from wireless non-service initialized (NSI) phones. NSI, per the Petition, constitute prepaid cell phones without service contracts that have no associated name and address, and do not provide Automatic Number Identification (ANI) and call back features used by Public Safety Answering Points (PSAPs) to respond to 911 calls. The crux of the rationale behind the Petition is that fraudulent 911 calls from such phones take valuable resources and time away from individuals 2. New Rules likely for Customer and families who truly are in need of emergency Proprietary Information & Retention Marketing assistance when they dial 911. The complaining PSAPs come from through- WASHINGTON, DC (April 11, 2008) The Federal out the country and include the Tennessee Communications Commission (FCC) has issued Emergency Communications Board, the Na- a recommended decision in the formal comtional Association of State 911 Administrators, plaint of Bright House Networks, LLC, et al.,v. the Michigan State 911 Office, the New Jersey Verizon California, Inc., et al., Case EB-08-MD002, denying claims that Verizon violated SecState 911 Commission, the Snohomish County 4:41:53 PM QuarterPageAdd_Quatro08.ai 4/29/08 Enhanced 911 Office, the National Emergency tion 208 and Section 222 of the Communication Investigators have concluded that the FCC processes appear broken and most of the blame seems to rest with Chairman Martin’s own administration of the agency. ing efforts, any proprietary information that it receives from another carrier “for purposes of providing any telecommunications service.” Critical for the Enforcement Bureau’s decision to dismiss the complaint was the issue that Section 222(b) does not expressly state whose provision of telecommunications services is covered. Specifically, section 222(b) does not expressly state whether its marketing ban applies when the receipt of proprietary information is for purposes of (i) the receiving carrier (such as Verizon) “providing any telecommunications service,” or (ii) the submitting carrier (here, a Competitive Carrier) “providing any telecommunications service,” or (iii) either the submitting carrier or the receiving carrier “providing any telecommunications service.” Based upon this “gap” in the statutory language, the Bureau dismissed the formal complaint and recommended further rulemaking. Further rulemaking stands to clarify how telecommunication carriers (wireless and otherwise) will be able to use proprietary information of other carriers that it receives for customer retention. With the FCC now strictly enforcing clearer CPNI requirements, it will be important to follow how the FCC strikes a harmony between CPNI policy and customer retention marketing. 3. Bill proposes elimination of “Common Carrier Exception” to FTC jurisdiction WASHINGTON, DC (April 14, 2008 - United States Senate) A bill has been introduced into the U.S. Senate that seeks to eliminate the “Common Carrier Exception” to the Federal Trade Commission Act of 1930, and allow the FTC more enforcement authority over telecommunication providers and their commercial practices. The bill, entitled the FTC Reauthorization Act of 2008, has been sponsored by Daniel Inouye (D-HI), chairman of the Senate Commerce Committee, and Byron Dorgan (D-ND) and the chairman of the Interstate Commerce, Trade, and Tourism Subcommittee. The thrust of the bill would repeal the “common carrier exception” which has been in force since the 1930s and currently exempts telecommunications providers (landline and wireless) from the requirements of the FTC Act. The Bill comes as the latest chapter in a series of proposed legislation and state enforcement of telecommunications outside the “Common Carrier Exception” against wireless and prepaid providers. In 2007, a bill was introduced by Sen. Amy Klobuchar (D-MN) entitled the Cell Phone Consumer Empowerment Act. This bill eventually died, but included a requirement that wireless carriers prorate early termination fees, which are viewed by consumer advocates as locking customers into restrictive contracts. In 4. Congressional Probe of FCC cites broken processes under Martin Administration WASHINGTON, DC (April 28, 2008 - United States Congress) House Commerce Committee investigators have formally recommended to Chairman John Dingell (D-MI) and investigations subcommittee Chairman Bart Stupak (D-MI) that hearings on FCC management practices be held in June, citing the results to of a recent probe of the FCC’s operation. The probe consisted of more than 30 interviews with current and former FCC employees in addition to industry representatives and private citizens. Investigators have concluded that the FCC processes appear broken and most of the blame seems to rest with Chairman Martin’s own administration of the agency. The results are no new issue to the FCC. In December 2007, Representative Dingell wrote Chairman Martin with concerns over an apparent lack of transparency in the FCC regulatory processes. Dingell stated at the time that: “While this is certainly not true for every commission proceeding, a trend appears to be emerging of short-circuiting procedural norms, suggesting a larger breakdown at the agency.” In January 2008, the committee informed Martin it was initiating a formal investigation of FCC management practices. On March 13, 2008 bi-partisan committee leaders issued requests for documents, including internal memos, travel records, e-mails, talking points, phone logs and meeting schedules of Martin, Martin’s staff and other commissioners. The primary concern of the congressional investigation relates to delays of FCC open meetings. Martin has responded to congressional concerns, however, this has largely been via monthly press briefings to preview upcoming votes and to field reporters’ questions on telecom issues generally. In April, the FCC began a new policy of giving the public three weeks notice of open-meeting agenda topics. While the topics of USF collection and funding have not bubb http://www.fcc.gov http://www.quatrocanada.com

Table of Contents Feed for the Digital Edition of The Prepaid Press - May 15, 2008

The Prepaid Press - May 15, 2008 Prepaid Attracts Press Attention First Data to Acquire InComm Contents The Retske Report: To Everything There Is A Season Regulatory Rundown: Rules, Bills and Probes Courtesy of the FCC 5 Minutes With Ray Horak, Telecom Author The Prepaid Press Expo Spotlight The Age of Prepaid Prepaid Wireless in Brief Prepaid Wireless Roundup American Wireless to Sell Virgin Mobile Openet Introduces Flexible Accounts Prepaid Reviews Launches Pay as You Go Podcast Motorola Reports Losses APC Wireless Buys Movida Virgin Mobile to Deliver Limbo Services The State of Prepaid Technology Start Your Engines! The Legal Line PhoenixSoft Adds Service Providers Blackstone to Distribute Viscom Calling Cards Spot Rates IVR Technologies Releases Talking SIP 3.4 Calling Cards in Brief Former IDT Employee Wins $10.5 Million Payments in Brief Hypercom SmartPayments Certified for Windows Pacific Resource Credit Union Selects TMG New Payment Software for QuickBooks POS Blood in the Water Prepaid 101: Give Me the Power 7-Eleven to Hold Innovation Event First Data Gives Ingenico I-Series Class A Support Coinstar Kicks Off Change Reuse Program Payment Application Data Security Standard Issued Forrester Predicts Online Sales to Climb Retail Focus in Brief Our Advertisers Contact Us

The Prepaid Press - May 15, 2008

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