Report No. DC-2601 ACTION IN DOCKET CASE May 19, 1994 FURTHER COMMENTS SOUGHT ON PROPOSAL TO ROUTE TELEPHONE CALLS VIA THE CARRIER CHOSEN BY THE PARTY PAYING FOR THE CALL (CC DOCKET NO. 92-77) The Commission announced today that it seeks further comment on whether to mandate a new system for routing "0+" calls -- that is, calls that are made by entering a "0" followed by a long distance number. While it found that the evidence available to it indicated that the benefits of the new system, called Billed Party Preference or BPP, outweighed its costs, the Commission also found that some of the data underlying its cost/benefit analysis were not as firm or as current as it desired. Currently, 0+ calls are sent to the operator services provider (OSP) to which the premises owner or payphone provider presubscribes. Under BPP, calls would be routed automatically to the OSP preferred by the party being billed for the call. For example, a calling card call would be routed to the cardholder's preferred OSP. A collect call would be routed to the called party's preferred OSP. A call billed to a third party would be routed to the OSP to which that third party had presubscribed. The Commission found that BPP would provide three principal benefits. First, it would make operator services more "user friendly." Under a BPP system, callers would be able to make all of their operator-assisted calls on a 0+ basis, and they would be able to do so with the knowledge that calls would be automatically handled by the OSP with which the billed party had chosen to do business at the rates offered by that OSP. Callers who currently use access codes would no longer need to do so. Callers who do not use access codes would no longer face the risk that their call would be carried by an operator service provider with rates considerably higher than the industry average. Based on data in the Commission's November 1992 report issued pursuant to the Telephone Operator Consumer Services Information Act, the Commission estimated that BPP would likely enable consumers to save about $280 million per year by avoiding operator service providers with rates higher than the AT&T/MCI/Sprint average. (over) - 2 - Second, the Commission found that BPP would force OSPs to refocus their competitive efforts towards serving consumers rather than serving aggregators, such as premises owners or payphone providers. The Commission recognized that such a shift in competitive focus would almost certainly eliminate the commissions that OSPs now pay to aggregators for directing 0+ calls to them. Moreover, based on the available data, it estimated that the elimination of commissions could save operator service providers about $340 million per year on interLATA 0+ calls. Not only did the Commission find that this could offset a substantial portion of the costs of BPP, but that a shift in competitive focus could also foster lower prices and better service for consumers. Finally, the Commission noted that BPP would eliminate certain AT&T advantages in the operator services market. For example, it would enable AT&T's competitors to offer end users the same 0+ access as AT&T. On the other hand, the Commission also noted that BPP is an expensive technology. While it found that available data indicated that the net cost of BPP for LECs would be approximately $380 million on an amortized unseparated cost basis, with an additional estimated $35 million per year for OSP expenses, it observed that this estimate was based on data that was not as firm nor as current as it would have liked. Therefore, the Commission chose to issue a Further Notice that sets forth in detail its cost/benefit analysis based on the available data, giving parties the opportunity to comment on the analysis and to submit additional, updated data to corroborate or refute it. The Commission also seeks comment on whether some or all of the benefits of BPP could be achieved through alternative, less costly measures. Finally, the Commission also addressed some aspects of how BPP should be implemented in the event it decides to mandate it. For example, the Commission decided that, if mandated, BPP should apply on a nationwide basis to all 0+ and 0- interLATA calls and that it should accommodate commercial credit cards. It also concluded that BPP should not give either LECs or OSPs the exclusive ability to issue line number cards, however, it seeks further comment on whether BPP should include a fourteen- or ten-digit screening design. It also seeks comment on whether prison phones should be subject to BPP. Action by the Commission May 19, 1994, by Further Notice of Proposed Rulemaking (FCC 94-117). Chairman Hundt, Commissioner Barrett, with Commissioner Quello concurring in the result and Commissioners Barrett and Quello issuing separate statements. - FCC - News Media contact: Rosemary Kimball at (202) 632-5050. Common Carrier Bureau contacts: Mark S. Nadel at (202) 632-1301 and Gary Phillips at (202) 632-4048.