Slamming Controversy Thickens in Washington

Posted: 07/1999

Slamming Controversy Thickens in Washington
By Kim Sunderland

Washington’s rising humidity index this month isn’t the only thing making federal
legislators hot under the collar. Slamming is pumping up temperatures around Capitol Hill
as telecommunications lawmakers attempt to ice down those companies that switch a
consumer’s long distance carrier without permission.

Most recently, the U.S. Court of Appeals for the District of Columbia Circuit in
mid-May stayed the Federal Communications Commission’s (FCC’s) slamming liability rules,
which were to take effect May 17. During the same week, three senators, disgusted with the
appeals court ruling, came forward with another bill they say is designed to stop the
widespread abuse of slamming. Two other bills failed during the final hours of last year’s
second session of Congress.

"Slamming has to stop once and for all," says Republican Sen. John McCain,
R-Ariz., chairman of the Committee on Commerce, Science and Transportation and who, along
with Sen. Olympia Snowe, R-Maine, and Richard Bryan, D-Nev., introduced the
Telecommunications Competition and Consumer Protection Act of 1999 (S.1084) May 19.
"This legislation establishes effective anti-slamming laws and stiff penalties for
those carriers found guilty" of slamming.

The federal proposal tackles slamming with a two-track approach, according to a bill
summary. A Code of Subscriber Protection Practices would be created with input from the
FCC, the Federal Trade Commission (FTC) and various representatives of the telecom
industry and would include minimum requirements such as:

• Restricting the use of negative option marketing;
• Requiring verification of changes in a subscriber’s service;
• Forbidding unfair and deceptive practices;
• Requiring carriers to provide subscribers with notifications of any changes in service;
  and
• Providing reimbursement and credits for charges not authorized by subscribers.

The senators’ proposal also would slap tough regulatory measures against any carriers
that chose not to use this code of practices. The senators want the FCC to prescribe
certain regulations–similar to those suggested for the code of practices–and impose
fines. Specifically, the bill proposes that the FCC be required "to award damages to
subscribers in the amount of $500, and to carriers harmed by slamming in an amount equal
to the sum such carriers would have received from the subscriber during the
violation," according to the bill summary. The bill also would require the FCC to
punish violations with fines "not less than $40,000 for the first offense and not
less than $150,000 for each subsequent offense."

The bill further requires the FCC to compile and publish a report ranking carrier
violations every six months. Those carriers that are among the top five worst performers
three reports in a row would be investigated and fined $1 million if the FCC finds they
misrepresented their adherence to this code of practices.

A McCain press secretary adds that a hearing on the senators’ proposal could be
expected soon.

The senators hastened introduction of their bill in response to the appeals court’s
stay of the FCC’s anti-slamming rules, which would let slammed consumers off the hook for
charges incurred for 30 days after an unauthorized switch, but force them to take slamming
complaints directly to their long distance carrier.

MCI WorldCom Inc. filed a petition seeking a stay of those rules to allow the FCC time
to consider an interexchange carrier (IXC) proposal that a third-party administrator (TPA)
handle slamming complaints. The IXCs, including MCI WorldCom, AT&T Corp. and Sprint
Corp., in March proposed setting up an industry-funded TPA that would include
representatives of large and small long distance companies and consumer groups to field
complaints, determine liability and handle refunds. The industry TPA also would devise
provisions regarding how consumers should be treated if they already had paid an
unauthorized carrier for calls. The proposal has additional support from Washington-based
trade groups the Competitive Telecommunications Association (CompTel) and the
Telecommunications Resellers Association (TRA), as well as Denver-based Qwest
Communications International Inc., Rochester, N.Y.-based Frontier Corp. and Dallas-based
Excel Communications Inc., but has been criticized by regulators and incumbent local
exchange carrier (ILEC) groups.