******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. In the Matter of Implementation of the ) CC Docket No. 96-115 Telecommunications Act of 1996 ) ) Telecommunications Carriers' Use ) of Customer Proprietary Network ) Information and Other Customer Information; ) ) Implementation of the Non-Accounting ) CC Docket No. 96-149 Safeguards of Sections 271 and 272 of the ) Communications Act of 1934, As Amended ) ORDER ON RECONSIDERATION AND PETITIONS FOR FORBEARANCE Adopted: August 16, 1999 Released: September 3, 1999 By the Commission: Commissioner Furchtgott-Roth approving in part, concurring in part and issuing a statement; Commissioner Tristani approving in part, dissenting in part and issuing a statement. TABLE OF CONTENTS Paragraph I. INTRODUCTION...........................................................................................................1 II. OVERVIEW....................................................................................................................7 III. BACKGROUND.............................................................................................................8 A. The CPNI Order................................................................................................8 B. The Clarification Order......................................................................................9 C. The Stay Order.................................................................................................10 IV. CONSISTENT TREATMENT FOR ALL CARRIERS..............................................11 A. Incumbents vs. CLECs.....................................................................................11 B. Wireline vs. Wireless Treatment.....................................................................12 C. Small and Rural Carriers................................................................................15 V. CARRIER'S RIGHT TO USE CPNI WITHOUT CUSTOMER APPROVAL............16 A. The Total Service Approach..........................................................................16 1. Background.......................................................................................16 2. Petitions for Reconsideration..............................................................18 3. Petitions for Forbearance...................................................................22 4. Requests for Clarification...................................................................30 B. Use of CPNI to Market Customer Premises Equipment and Information Services.........................................................................................................39 1. Background......................................................................................39 2. Petitions for Reconsideration.................................................................40 3. Petitions for Forbearance......................................................................48 a. Introduction..............................................................................48 b. CMRS Providers....................................................................49 c. Wireline Carriers...................................................................50 d. Forbearance from all CPNI Rules for CMRS Providers............57 C. Use of CPNI to Market to Former and "Soon-to-be-Former" Customers.........64 1. Background.........................................................................................64 2. "Winback"............................................................................................66 a. Background..............................................................................66 b. Discussion................................................................................67 3. Retention of Customers.......................................................................75 a. Background............................................................................75 b. Discussion..............................................................................77 c. Petitions for Forbearance.........................................................80 D. Disclosure of CPNI When a Customer is "Won"..............................................86 VI. APPROVAL UNDER SECTION 222(c)(1)...............................................................93 A. Grandfathering Pre-existing Notifications......................................................93 B. Oral and Written Notification........................................................................103 C. Preemption of State Notification Requirements.............................................112 D. Details of CPNI Notice..................................................................................115 VII. SAFEGUARDS UNDER SECTION 222................................................................117 A. Background...................................................................................................117 B. Notice...........................................................................................................121 C. Evidence of Cost of Compliance...................................................................124 D. The Flagging Requirement..............................................................................126 E. The Audit Trail Requirement.......................................................................127 F. The Corporate Officer Certification..............................................................128 G. Other Safeguard Provisions.............................................................................130 H. Petitions for Forbearance................................................................................131 I. Small and Rural Carriers.................................................................................132 J. Adequate Cost Recovery................................................................................133 K. Enforcement of CPNI Obligations ...............................................................134 VIII. SECTION 222 AND OTHER ACT PROVISIONS..................................................135 A. Section 222 and Section 272.........................................................................135 B. Disclosure of Non-CPNI Information Pursuant to Section 272.....................146 C. Section 222 and Section 254........................................................................149 D. Application of Nondiscrimination Rules Under Sections 201(b) and 202(a)...152 IX. OTHER ISSUES......................................................................................................154 A. Status of Customer Rewards Program.............................................................154 B. Non-telecommunications Services Listed on Telephone Bill...........................157 C. Provision of Calling Card as Provision of Service..........................................160 D. Use of CPNI to Prevent Fraud........................................................................162 E. Definition of "Subscribed" in Section 222(f)(1)(A)........................................165 F. CPNI "Laundering".........................................................................................166 G. Acts of Agents of Wireless Providers............................................................168 H. Information Known to Employees................................................................172 I. Use of CPNI Under Section 222(d)(3) During Inbound Calls........................173 X. PROCEDURAL ISSUES...........................................................................................177 XI. ORDERING CLAUSES.............................................................................................201 APPENDIX A APPENDIX B I. INTRODUCTION 1. On February 26, 1998, the Commission released the CPNI Order adopting rules implementing the new statutory framework governing carrier use and disclosure of customer proprietary network information (CPNI) created by section 222 of the Communications Act (hereinafter "the Act"). CPNI includes, among other things, to whom, where, and when a customer places a call, as well as the types of service offerings to which the customer subscribes and the extent the service is used. 1. This order on reconsideration is issued in response to a number of petitions for reconsideration, forbearance, and/or clarification of the CPNI Order. In this order we modify the CPNI Order, in part, to preserve the consumer protections mandated by Congress while more narrowly tailoring our rules, where necessary, to enable telecommunications carriers to comply with the law in a more flexible and less costly manner. 2. The Telecommunications Act of 1996 (1996 Act) became law on February 8, 1996. Although most of the provisions in the 1996 Act aim to implement Congress' intent that the 1996 Act "provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services to all Americans by opening all telecommunications markets to competition," section 222 addresses a different goal. CPNI is extremely personal to customers as well as commercially valuable to carriers. As we stated in the CPNI Order: Congress recognized . . . that the new competitive market forces and technology ushered in by the 1996 Act had the potential to threaten consumer privacy interests. Congress, therefore, enacted section 222 to prevent consumer privacy protections from being inadvertently swept away along with the prior limits on competition. 3. As the Commission previously noted in the CPNI Order, section 222 is largely a consumer protection provision that establishes restrictions on carrier use and disclosure of personal customer information. The aim of section 222 stands in contrast to the other provisions of the 1996 Act that seek primarily to "[open] all telecommunications markets to competition," and mandate competitive access to facilities and services. Section 222 reflects Congress' view that as competition increases, it brings with it the potential that consumer privacy interests will not be adequately protected by the marketplace. Thus, section 222 requires all carriers, whether or not a market is competitive, to protect CPNI and embodies the principle that customers must be able to control their personal information from unauthorized use, disclosure, and access by carriers. Where information is not specific to the customer, or where the customer so directs, section 222 permits the free flow or dissemination of information beyond the existing customer- carrier relationship. 4. In most circumstances, the constraints placed on carriers by section 222 only restrict the use or disclosure of CPNI without customer approval. When carriers are prevented from using a customer's CPNI by section 222, and the rules we promulgated in the CPNI Order, carriers need only obtain the customer's approval to use that customer's CPNI. Once a carrier has acquired customer approval, carrier use or disclosure of CPNI, in most cases, is unrestricted. Thus, section 222 enables customers to relinquish the presumption of privacy as they see fit. 5. Congress' determination in section 222 to balance competitive interests with consumers' interests in privacy and control over CPNI governed the Commission's reasoning and conclusions in the CPNI Order. This order is no different: we seek to carry out vigilantly Congress' consumer protection and privacy aims, while simultaneously reducing the burden of carrier compliance with section 222 by eliminating unnecessary expense and administrative oversight where customer privacy and control will not be sacrificed. II. OVERVIEW 6. By this order, we respond to the requests for reconsideration, clarification and forbearance as follows: (a) We deny the petitions for reconsideration which ask us to amend the CPNI rules to differentiate among telecommunications carriers. (b) We decline to modify or forbear from the total service approach adopted in the CPNI Order because the total service approach keeps control over the use of CPNI with the customer and best protects privacy while furthering fair competition. We also clarify a number of aspects of the total service approach in response to petitioners' requests. (c) We grant, in part, the petitions for reconsideration which request that we allow all carriers to use CPNI to market customer premises equipment (CPE) and information services under section 222(c)(1) without customer approval. We conclude that all carriers may use CPNI, without customer approval, to market CPE. We further conclude that CMRS carriers may use CPNI, without customer approval, to market all information services, while wireline carriers may do so for certain information services. We deny the petitions for forbearance on these issues. (d) We eliminate the restrictions on a carrier's ability to use CPNI to regain customers who have switched to another carrier, contained in Section 64.2005(b)(3) of our rules. We find that "winback" campaigns are consistent with Section 222(c)(1). The Order concludes, however, that if a carrier uses information regarding a customer's decision to switch carriers derived from its wholesale operations to retain the customer, such conduct violates the prohibitions in section 222(b) against use of proprietary information gained from another carrier in marketing efforts. (e) We address various aspects of a customer's approval to use CPNI consistent with section 222. We also grandfather a limited set of pre-existing notifications to use CPNI and adopt the conclusions reached in the Common Carrier Bureau's Clarification Order. We also eliminate, in an effort to reduce confusion and regulatory micro-management, section 64.2007(f)(4) of our rules, which requires a carrier's solicitation for approval, if written, to be on the same document as the carrier's notification. Further, we affirm our decision to exercise our preemption authority on a case-by-case basis for state rules that conflict with our own. (f) We lessen the regulatory burden of various CPNI safeguards while continuing to require that carriers protect customer privacy. We modify our flagging requirement so that carriers must clearly establish the status of a customer's CPNI approval prior to the use of CPNI, but leave the specific details of compliance with the carriers. In so doing, we allow the carriers the flexibility to adapt their record keeping systems in a manner most conducive to their individual size, capital resources, culture and technological capabilities. Similarly, we amend our rules to eliminate the electronic audit trail requirement and instead require carriers to maintain a record of their sales and marketing campaigns that use CPNI. (g) We affirm our conclusion in the CPNI Order that the most reasonable interpretation of the interplay between sections 222 and 272 is that section 272 does not impose any additional obligations on the Bell operating companies (BOCs) when they share their CPNI with their section 272 affiliates. We also adopt the Common Carrier Bureau's conclusion in the Clarification Order that a customer's name, address and telephone number are "information" for the purposes of section 272(c)(1), and consequently, if a BOC makes such information available to its 272 affiliate, it must then make it available to non-affiliated entities. (h) We find that the relationship of sections 222 and 254 does not confer any special status to carriers seeking to use CPNI to market enhanced services and CPE in rural exchanges to select customers. Moreover, the Order rejects the contention that the Commission should apply the requirements of sections 201(b), 202(a) and 272 to incumbent local exchange carriers (ILECs) to impose a duty on ILECs to electronically transmit a customer's CPNI to any other entity that obtains a customer's oral approval to do so. III. BACKGROUND A. The CPNI Order 7. On May 17, 1996, the Commission initiated a rulemaking, in response to various formal requests for guidance from the telecommunications industry, regarding the obligation of carriers under section 222 and related issues. The Commission subsequently released the CPNI Order on February 26, 1998. The CPNI Order addressed the scope and meaning of section 222, and promulgated regulations to implement that section. It concluded, among other things, as follows: (a) carriers are permitted to use CPNI, without customer approval, to market offerings that are related to, but limited by, the customers' existing service relationship; (b) before carriers may use CPNI to market outside the customer's existing service relationship, carriers must obtain express written, oral, or electronic customer approval; (c) prior to soliciting customer approval, carriers must provide a one-time notification to customers of their CPNI rights; (d) in light of the comprehensive regulatory scheme established in section 222, the Computer III CPNI framework is unnecessary; and (e) sections 272 and 274 impose no additional CPNI requirements on the Bell Operating Companies (BOCs) beyond those imposed by section 222. B. The Clarification Order 8. On May 21, 1998, in response to a number of requests for clarification of the CPNI Order, the Common Carrier Bureau released a Clarification Order. This order addressed several issues. It concluded that independently-derived information regarding customer premises equipment (CPE) and information services is not CPNI and may be used to market CPE and information services to customers in conjunction with bundled offerings. In addition, it clarified that a customer's name, address, and telephone number are not CPNI. Moreover, it stated that a carrier has met the requirements for notice and approval under section 222 and the Commission's rules if it has both provided annual notification to, and obtained prior written authorization from, customers with more than 20 access lines in accordance with the Commission's former CPNI rules. Finally, it determined that carriers are not required to file their certifications of corporate compliance, which carriers are required to issue by the CPNI Order, with the Commission. C. The Stay Order 9. In the CPNI Order, the Commission required, among other things, that carriers develop and implement software systems that "flag" customer service records in connection with CPNI and that carriers maintain an electronic audit mechanism ("audit trail") that tracks access to customer accounts. The Commission chose to defer the enforcement of these rules until eight months after the effective date of the rules: January 26, 1999. On September 24, 1998, however, the Commission stayed, until six months after the release date of an order addressing these issues on reconsideration, the enforcement of actions against carriers for noncompliance with applicable requirements set forth in the Commission's rules. IV. CONSISTENT TREATMENT FOR ALL CARRIERS A. Incumbents vs. CLECs 10. Section 222(c)(1) restricts the ability of telecommunications carriers to use CPNI without customer approval. In the CPNI Order, we concluded that "Congress did not intend to, and we should not at this time, distinguish among carriers for the purpose of applying Section 222(c)(1)." We found, based upon the language of the statute itself, that section 222 applies to all carriers equally and, with few exceptions, does not distinguish among classes of carriers. Various parties on reconsideration, however, seek reversal of this conclusion. One group of petitioners advocates that we impose stricter CPNI restrictions on incumbent carriers than competitors, based upon the greater potential for anticompetitive use or disclosure of CPNI by ILECs. We previously rejected this very argument in the CPNI Order. These parties have not raised any arguments or facts that persuade us to reverse our conclusion that section 222 is intended to apply to all segments of the telecommunications marketplace regardless of the level of competition present in any segment. Accordingly, we affirm that section 222 does not distinguish between classes of carriers and applies to all carriers equally. B. Wireline vs. Wireless 11. Other petitioners highlight the differences between wireless and wireline regulation and request that the Commission treat CMRS carriers differently for purposes of the CPNI rules. These petitioners assert that notwithstanding section 222's mandate to apply its restrictions to "all telecommunications providers," the Commission has often distinguished among various classes of providers when it was appropriate to do so. In fact, as one petitioner notes, until Congress passed section 222, CMRS providers had not been subject to any Commission regulation in their use of CPNI. 12. Moreover, several parties believe that the impact of compliance with the CPNI Order will cause CMRS providers to bear disproportionate burdens. Comcast asserts that CMRS providers generally do not have a monopoly base or a nationwide market scope to cushion the impact of compliance. Vanguard states that independent CMRS providers are hardest hit when compared to integrated companies, and that CMRS providers must bear these costs without the benefit of the ability to use CPNI to cross-market to large, installed bases. Vanguard also states that these burdens--often in the form of additional regulation, including E911, local number portability, Year 2000 compliance, universal service requirements, and the conversion to digital technology--pose significant hardships. 13. Again, we return to the text of section 222, which applies to "telecommunications carriers" generally. Congress enacted section 222 at a time when the wireless industry had been subject to less regulatory requirements than wireline carriers. Congress was fully aware that CMRS providers, and CLECs for that matter, were to evolve in more competitive environments. Notwithstanding, there is nothing in the statute or its legislative history to indicate that Congress intended that the CPNI requirements in section 222 should not apply to wireless carriers. Given the opportunity to exclude competitive carriers from the scope of section 222, we must give meaning to the fact that Congress did not exempt them. Moreover, the underlying policy objective of section 222 is to protect consumers, while balancing competitive interests. We believe that the privacy interests of CMRS customers are no less deserving of protection than those of wireline customers, although the differences in customer expectations may warrant different approaches. We note too that this reconsideration lightens the impact of compliance with the CPNI rules on all carriers by providing flexibility for technological differences in administrative systems with regard to the electronic safeguards rules, which should be beneficial to all companies, including independent CMRS providers. Finally, we note that a few parties urge the Commission to forbear from enforcing CPNI obligations on CMRS providers generally. We address these arguments in Part V.B.3.d., infra. Therefore, we deny those petitions for reconsideration that seek different treatment for CMRS carriers. C. Small and Rural Carriers 14. Still other carriers request that we treat rural and small carriers differently. As we noted in the CPNI Order, however, the Commission's CPNI rules apply to small carriers just as they apply to other sized carriers "because we are unpersuaded that customers of small businesses have less meaningful privacy interests in their CPNI." Petitioners have not raised any new arguments or facts that persuade us to reverse this conclusion with respect to these carriers. Thus, we will not distinguish among carriers based upon the number or density of lines they serve either. V. CARRIER'S RIGHT TO USE CPNI WITHOUT CUSTOMER APPROVAL A. The Total Service Approach 1. Background 15. In the CPNI Order, the Commission addressed the instances in which a carrier could use, disclose, or permit access to CPNI without prior customer approval under section 222(c)(1)(A). Section 222(c)(1) provides that a telecommunications carrier that receives or obtains CPNI by virtue of its "provision of a telecommunications service shall only use, disclose, or permit access to individually identifiable [CPNI] in the provision of (A) the telecommunications service from which such information is derived, or (B) services necessary to, or used in, the provision of such telecommunications service, including the publication of directories." 16. After considering the record, statutory language, history, and structure of section 222, we concluded that Congress intended that a carrier's use of CPNI without customer approval should depend on the service subscribed to by the customer. Accordingly, the Commission adopted the "total service approach" which allows carriers to use a customer's entire record, derived from complete service subscribed to from that carrier, to market improved services within the parameters of the existing customer-carrier relationship. The total service approach permits carriers to use CPNI to market offerings related to the customer's existing service to which the customer presently subscribes. Under the total service approach, the customer retains ultimate control over the permissible marketing use of CPNI, a balance which best protects customer privacy interests while furthering fair competition. Presented with the opportunity to permit or prevent a carrier from accessing CPNI for marketing purposes, the customer has the ability to determine the bounds of the carrier's use of CPNI. 2. Petitions for Reconsideration 17. GTE urges the Commission to reconsider the total service approach to allow carriers to use, without customer consent, CPNI derived from the provision of a package of telecommunications services in order to market other telecommunications services to which a customer does not subscribe. This "package approach" is only a slight variation of the "single category approach," which we specifically analyzed and rejected in the CPNI Order. The single category approach would have permitted carriers to use CPNI obtained from the provision of any telecommunications service, including local or long distance or CMRS, to market any other service offered by the carrier, regardless of whether the customer subscribes to such service from that carrier. Similarly, GTE's proposal would allow a carrier to market to customers any services or enhancements to the package that GTE offers, regardless of the services to which the customer has subscribed. For instance, GTE could decide, based on CPNI, that a customer who subscribes only to local service is a suitable candidate for a promotional cellular service plan, where the customer has not consented to such a solicitation. GTE argues that "[i]n the case of packaged services, the customer will regard the package, not the components, as comprising his or her total service offering." We reject GTE's proposal because, like the single category approach, it removes control over CPNI from the customer. GTE would define and change the contents of the package at its discretion. As a practical consequence, GTE's marketing would be limited only by what GTE chooses to include in the package, even if that includes everything that GTE is capable of offering. 18. We decline to grant GTE reconsideration on this issue because that would vitiate the total service approach and the attendant protection of a customer's sensitive information. The hallmark of the total service approach is that the customer, whose privacy is at issue, establishes the bounds of his or her relationship with the carrier. We note, however, that to the extent a customer already subscribes to a particular service or subscribes across services, GTE or any carrier can use the customer's CPNI to market or create enhancements to those services. Congress could not have intended an interpretation of section 222 that leaves the consumer without privacy protection. We concluded in the CPNI Order, and nothing has persuaded us otherwise here, that the total service approach best protects customer privacy while furthering fair competition. GTE seeks to use CPNI derived from the provision of certain telecommunications services to market other telecommunications services to which the customer does not subscribe. We conclude that this would not further the privacy goals that Congress sought to achieve in Section 222. Over time, the total service approach rewards successful carriers who offer integrated packages by enabling marketing in more than one category but in a manner that respects customer privacy. 19. GTE requests, in the alternative, that the Commission adopt a rule that permits the use of CPNI for the limited purpose of identifying customers from whom it would like to solicit express, affirmative approval to use their CPNI for marketing out-of-category services. MCI supports the use of CPNI in this way. We conclude that such use of CPNI is implicit in section 222(c)(1) because the solicitation of approval is a logical prerequisite to actually obtaining approval. The carrier's use of CPNI under these limited circumstances, therefore, is merely a part of the process of obtaining approval. Thus, the use of CPNI for solicitations of approval to use CPNI to market services outside the bounds of the existing customer-carrier relationship necessarily falls under the customer approval exception stated in section 222(c)(1). We agree with GTE that customer privacy would not be diminished by such an interpretation because carriers must still obtain the customer's express consent before using the customer's CPNI for marketing to the customer or for any other purpose. We note, moreover, that our interpretation serves customer privacy, convenience, and control as it allows carriers to identify customers more likely to be interested in approval solicitations, while preserving the requirement under section 222 that carriers obtain express, affirmative customer approval. 20. NTCA urges us to reconsider the total service approach because it is particularly disadvantageous to small, rural LECs looking to launch new service offerings. We addressed and rejected this argument in the CPNI Order. NTCA has presented no new evidence to persuade us that its members are disproportionately affected in any cognizable way by these requirements. 3. Petitions for Forbearance 21. Alternatively, GTE and Ameritech seek forbearance from the application of the total service approach to the marketing of out-of-category packages or service enhancements to customers. After careful review, we believe the forbearance test is not met. Forbearance under section 10 of the Act is required where: (1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory; (2) enforcement of such regulation or provision is not necessary for the protection of consumers; and (3) forbearance from applying such provision or regulation is consistent with the public interest. Section 10(b) provides that, in making the determination whether forbearance is consistent with the public interest, the Commission must consider whether forbearance will promote competitive market conditions, including the extent to which forbearance will enhance competition among providers of telecommunications services. 22. Section 10(a)(1). GTE and Ameritech assert that the ability to offer service packages will not result in unreasonable or discriminatory rates. According to GTE, any service package will necessarily include at least one service that the Commission recognizes as competitive (i.e., long distance or CMRS) and is supplied by nondominant carriers. As such, the market will assure that competitive elements of the service packages are priced reasonably. Moreover, under current regulation noncompetitive services will also be available on an unbundled basis from a dominant carrier at rates subject to state and federal regulation. The net result, GTE contends, is that service packages will not involve unreasonable or unlawfully discriminatory charges or terms. Ameritech adds that years of carrier use of CPNI has not led to adverse consequences. 23. The primary focus of the CPNI rules is not, nor ever has been, intended to ensure reasonable rates or practices. Therefore, we determine that enforcement of the total service approach is not necessary to ensure that the charges, practices, classifications, or regulations are just and reasonable and are not unjustly or unreasonably discriminatory. 24. Section 10(a)(2). GTE asserts that prohibiting the use of CPNI without approval to market package enhancements is not necessary to protect consumers. Ameritech believes CPNI protection is not necessary where, like here, the use is consistent with customer expectations. Customers, according to GTE, will welcome enhancements to the package that are tailored to their needs as determined by analyzing their CPNI. 25. We conclude that the second criterion for forbearance is not met because customers' privacy interests would not be adequately protected absent the total service approach. GTE and Ameritech would have us forbear from enforcing the total service approach when consumer protection is a primary concern of section 222. Specifically, the customer approval process for the use of CPNI is necessary to protects customers' privacy expectations because, as stated in the CPNI Order, we do not believe that we can properly infer that a customer's decision to purchase one type of service offering constitutes approval for a carrier to use CPNI to market other service offerings to which the customer does not subscribe. Nor are we aware of any other law, regulation, agency or state requirement that would substitute for the effectiveness of our approach. The total service approach protects customer privacy expectations by placing the control over the approval process in the hands of the customer. The total service also approach protects customers in many instances where they would not realize potentially sensitive, personal information had been accessed or used. The GTE and Ameritech approaches lack this crucial element of consumer protection. 26. Section 10(a)(3). GTE believes forbearance is in the public interest because of the reduction in carriers' administrative costs to communicate with customers where a carrier can use CPNI to market across service categories without the need for customer approval. GTE also heralds the improved ability of CLECs to introduce new, improved and branded combinations of competitive services and products. The public also benefits, according to GTE and Ameritech, from receiving information without artificial constraints based on service categories. 27. We find that forbearance would not be in the public interest. The privacy goals of the statute are not met where carriers can use CPNI without customer approval to sell products and services outside the existing customer-carrier relationship. Although reducing the administrative costs to carriers may assist these companies in competing with other carriers, we find that any potential benefit is outweighed by the need to protect customer privacy. Customers who are interested in obtaining more information can arrange to do so easily by granting consent for their carriers' use of CPNI. 28. Pursuant to section 10(b) of the Act, we have evaluated whether forbearance from the total service approach will promote competitive market conditions, including the extent to which forbearance will enhance competition among providers of telecommunications services. We agree that, as a general matter, reducing carriers' administrative and regulatory costs promotes competitive market conditions and would improve the ability of new entrants to introduce new, improved combinations of competitive services and products. However, we are concerned that the GTE and Ameritech proposals, which eliminate the boundaries we have established for the use of CPNI, may unreasonably deprive other telecommunications carriers the opportunity to compete for a customer's business. The ability to use CPNI from an existing service relationship to market new services to a customer bestows an enormous competitive advantage on those carriers that currently have a service relationship with customers, particularly incumbent exchange carriers and interexchange carriers with a large existing customer base. This, in turn, poses a significant risk to the development of competition. For this reason, as well, we cannot find that forbearance is in the public interest. 4. Requests for Clarification 29. Several petitioners request clarification of aspects of the total service approach and its application in specific contexts. We address these requests below. a. Multiple Lines and Carriers 30. MCI requests clarification as to whether the total service approach should be applied on a subscriber line-by-line basis or to the subscriber's services overall. To illustrate the significance of this distinction, MCI uses the example of a customer with two lines, each line having a different presubscribed interexchange carrier (PIC). MCI queries whether each PIC is considered the customer's sole long-distance carrier for that line, so that the carrier must limit to that line its use of CPNI to market other long distance service or whether the carrier can market long distance services to both lines. MCI poses a second, related question, whether a customer can have more than one carrier in any given service category, thus allowing both carriers to market other services in the same category to that customer. 31. We believe that the total service approach applies to the customer's total telecommunications service subscription, and proper use of CPNI is not necessarily limited to the line from which it was derived. Section 64.2005(a) of our rules permits a telecommunications carrier to use CPNI for the purpose of marketing service offerings among the categories of service already subscribed to by the customer from the same carrier. Although MCI proposes to use CPNI from one line to market to another line of the same customer, the use of CPNI is permissible because it remains within the category of service. As to MCI's second question, we do not limit a customer's choice to select more than one carrier in a given service category. For the same reasons cited above, where the use of CPNI remains within a service category, a carrier is able to market that same service to the customer without the need for express customer approval. In this manner, a carrier's attempt to garner more of the customer's business is pro- competitive and does not impinge on a customer's privacy. b. Codification of Service Categories 32. MCI and CommNet request that the Commission explicitly state that all telecommunications services fall within three groupings--local, interLATA, and CMRS. MCI believes that this will assist carriers in deciding whether a particular service feature fits within the boundaries of the carrier's total service offering. 33. We decline to do so because it would have the effect of grafting onto the total service approach one of the critical flaws of the so-called "three category" approach. As explained in greater detail in the CPNI Order, the three category approach parsed telecommunications services into the three traditional service distinctions--local, interLATA, and CMRS. Given the dynamic nature of the telecommunications industry, we can not assume that all services necessarily fall into such categories. We believe the total service approach is sufficiently flexible to incorporate new and different categories without periodic reviews to ascertain whether changes in the competitive environment should translate into changes in service categories. Rather, we agree with U S WEST that it is unnecessary to modify the total service approach in this regard or to further codify the three service categories in the rules. c. Use of CPNI to Market Paging 34. In the CPNI Order, the Commission determined that CMRS should be viewed in the entirety, when considering the "total service approach." CommNet urges the Commission to revise its rules to make it clear that the service categories to which the "total service" relationship applies are only local exchange service, interexchange service, and CMRS, so that a paging carrier could use CPNI to market cellular service and vice versa. U S WEST objects on the grounds that the language of the current rule was taken directly from the statute and that the categories may blur over time and may disappear as customers migrate to single source providers. 35. We find that our rules are clear that under the total service approach, a CMRS carrier may use CPNI to market any CMRS service, including paging and cellular service. Therefore, no revision of the rules is required. d. IntraLATA Toll Services 36. In the CPNI Order, the Commission concluded that insofar as both local exchange carriers and interexchange carriers currently provide short-haul toll, it should be considered part of both local and long-distance service. We further concluded that permitting short-haul toll to "float" between categories would not confer a competitive advantage upon either interexchange or local exchange carriers. MCI concludes that the provision of short-haul toll may only be considered part of carrier's "primary service category" and requests that we make such a clarification. 37. We agree with MCI that our prior conclusion requires clarification. MCI argues that if a local exchange carrier is providing local service, then it may use a customer's local service CPNI to market intraLATA toll to that customer, and vice-versa, and if an interexchange carrier is providing long distance service to a customer, then it may use that customer's long distance CPNI to market intraLATA toll to him or her, and vice versa. We reject MCI's proposal that we link short-haul toll to the carrier's "primary service category." Rather, we conclude that short-haul toll shall be considered as falling within the category of service the carrier is already providing to the customer. For example, a carrier may use CPNI from short-haul toll to market local services only if the carrier is already providing local service. Long distance carriers providing intraLATA toll service, however, need obtain customer approval to use intraLATA toll CPNI to market local service. Likewise, local exchange carriers would need customer approval to use intraLATA toll CPNI to market interLATA long distance service. GTE argues that such a rule is unfair and anticompetitive because it would prohibit local carriers from using intraLATA toll CPNI to market long distance services, but would allow long distance carriers to market intraLATA services or vice versa. As explained above, however, in GTE's example, long distance carriers need to obtain a customer's permission to use intraLATA toll CPNI to market local services. In this way, the rule is fair to both interexchange and local exchange carriers and treats them symmetrically. B. Use of CPNI to Market Customer Premises Equipment and Information Services 1. Background 38. Section 222(c)(1) states that, "[e]xcept as required by law or with the approval of the customer, a telecommunications carrier that receives or obtains [CPNI] by virtue of its provision of a telecommunications service shall only use, disclose, or permit access to individually identifiable [CPNI] in its provision of (A) the telecommunications service from which such information is derived, or (B) services necessary to, or used in, the provision of such telecommunications service, including the publishing of directories." In the CPNI Order, we concluded that Congress intended that section 222(c)(1)(A) govern carriers' use of CPNI for providing telecommunications services and that section 222(c)(1)(B) governs carriers' use of CPNI for non-telecommunications services. Based upon the language of section 222(c)(1), we further concluded that: (1) inside wiring, CPE, and certain information services do not fall within the scope of section 222(c)(1)(A) because they are not "telecommunications services;" and (2) CPE and most information services do not fall under section 222(c)(1)(B) because they are not "services necessary to, or used in, the provision of such telecommunications service." We now find that the phrase "services necessary to, or used in, the provision of such telecommunications service" should be given a broader reading than the one given in the CPNI Order. The record produced on reconsideration persuades us that a different statutory interpretation is permissible, and importantly, would lead to appropriate policy results consistent with the statutory goals. Therefore, we conclude that section 222(c)(1)(B) allows carriers to use CPNI, without customer approval, to separately market CPE and many information services to their customers. We further clarify that the tuning and retuning of CMRS units and repair and maintenance of such units is a service necessary to or used in the provision of CMRS service under section 222(c)(1)(B). Finally, we deny petitioners' requests that we forbear from applying these restrictions for related CPE and information services. 2. Petitions for Reconsideration 39. Customer Premises Equipment and Information Services under Section 222(c)(1). We grant the petitions for reconsideration that argue that CPE and certain information services are "necessary to, or used in, the provision of" telecommunications services, and therefore use of CPNI derived from the provision of a telecommunications service, without customer approval, to market CPE and information services would be permitted under section 222(c)(1)(B). Under our previous interpretation, the exception was narrowly construed, resulting in very few services for which CPNI could be shared. Indeed, we rejected all CPE because it was not a "service" and most information services because they were not necessary to or used in the carrier's provision of the telecommunications service. While this interpretation is not inconsistent with the statutory language, we are persuaded that the better interpretation is that the exception includes certain products and services provisioned by the carrier with the underlying telecommunications service to comprise the customer's total service. This is because those related services and products facilitate the underlying telecommunications service and customers expect that they will be used in the provisioning of that service offering. Our new interpretation accords with the Commission's stated intention in the CPNI Order to revisit and if necessary revise its conclusions regarding customer expectations as those expectations changed in the marketplace with advancements in technology or as new evidence of the evolution of customer expectations becomes available to the Commission. Such evidence has now been made available to us by the record developed on reconsideration. 40. When evaluated as a whole, the exception can be reasonably interpreted to include those products used in the provision of telecommunications, including directories and CPE. First, we find statutory support for this interpretation through the only example Congress included in the exception the publishing of directories. As described in the CPNI Order, directories are "necessary to and used in" the provision of service because without access to phone numbers, customers cannot complete calls. A directory is not a "service," but rather, like CPE, is a product. Consistent with the statutory exception, however, the "publishing" of the directory is a service the service by which the carrier provisions the product necessary to, or used in, the customer's telecommunications service. Thus, Congress' publishing of directories example supports including those products as well as services provisioned by the carrier that are used in and necessary to the customer's telecommunications service. We believe that our previous interpretation construed the term "services" in isolation from the phrase "necessary to, or used in." While it is obvious that CPE itself is not a service, the provision of CPE is a service that is necessary to, or used in the provision of the underlying telecommunications service. Customers cannot make, or complete, calls without CPE. This is consistent with Congress' example of the publishing of directories in section 222. Therefore, this finding concerning CPE is limited to section 222. Also, the CPE that is included in this exception is limited to CPE that is used in the provision of the telecommunications service from which the CPNI is derived. 41. Second, our broader statutory interpretation appropriately protects the customer's reasonable expectations of privacy in connection with CPNI, which many petitioners argue is the appropriate test for determining the limitations on the use of CPNI without a customer's approval. On the one hand, as described below, our new interpretation sets appropriate limits, consistent with the statutory language, on those information services and CPE "necessary to, or used in," the customer's service. In this way, our new interpretation advances the principle of customer control that we set forth in the CPNI Order. On the other hand, the record establishes that our prior restrictive interpretation, excluding all CPE and information services, leads to anomalous results and does not advance the principle of customer convenience embodied in the provision. For example, we concluded that carriers could use CPNI to market caller ID to their customers, but could not use it to market caller ID CPE that is necessary for the customer to be able to receive the service. We are thus persuaded that CPE and many information services properly come within the meaning of section 222(c)(1)(B) as we describe below. 42. In the wireless context, our regulation of CMRS providers and the history of the industry has allowed the development of bundles of CPE and information services with the underlying telecommunications service. Thus, information services and CPE offered in connection with CMRS are directly associated and developed together with the service itself. Indeed, we are persuaded by the record and our observations of the development of the CMRS market generally that the information services and CPE associated with CMRS are reasonably understood by customers as within the existing service relationship with the CMRS provider. Customers expect to have CPE and information services marketed to them along with their CMRS service by their CMRS provider. Accordingly, we conclude that such CPE and information services come within the meaning of "necessary to, or used in," the provision of service. In the CMRS context, carriers should be permitted to use CPNI, without customer approval, to market information services and CPE to their CMRS customers. 43. The wireline industry has developed somewhat differently from CMRS and, while the analysis is the same, the results concerning how carriers may use CPNI accordingly differ from the wireless industry. The provision of CPE, like the publishing of directories, is a service which is used in and generally necessary to the provision of the telecommunications service. For at least the past ten years, all wireline companies have been able to market CPE along with their telecommunications service. Petitioners argue that by erecting a CPNI approval requirement with respect to CPE, the Commission frustrates customers' one-stop shopping expectations and stymies carriers' abilities to offer complete service solutions that customers want and have come to expect. Simply put, customers expect their carriers to market CPE to them. No evidence has been produced on the record which shows that allowing wireline carriers to market CPE to their customers, using CPNI without customer consent, violates customers' expectations. We are convinced that such usage by carriers would be beneficial to customers as new and advanced products develop. Therefore, wireline carriers should be permitted to use CPNI, without customer approval, to market CPE to their customers. 44. Within the broader reading of the statute, we find that certain wireline information services should also be considered necessary to, or used in, the provision of the underlying telecommunications service. In the CPNI Order, the Commission listed several information services that it believed should not be considered necessary to, or used in, the underlying telecommunications service: call answering, voice mail or messaging, voice storage and retrieval services, and fax storage and retrieval services. Applying the broader reading of the statute, along with the new evidence on the record, we now believe that all of these services should be considered necessary to, or used in, the provision of the underlying telecommunications service because customers have come to depend on these services to help them make or complete calls. The record indicates that customers have come to expect that their service provider can and will offer these services along with the underlying telecommunications service. Therefore, carriers may use CPNI, without customer approval, to market call answering, voice mail or messaging, voice storage and retrieval services, and fax storage and retrieval services. 45. We continue to exclude from this list, as the Commission did in the CPNI Order, Internet access services. Despite contrary claims from some petitioners, there is no convincing new evidence on the record that shows that such services are necessary to, or used in, the making of a call, even in the broadest sense. There is also no evidence, currently, that customers expect to receive such services from their wireline provider, or that they expect to use such services in the way that they expect to receive or use the above-listed services. 46. We will, however, add protocol conversions to the list of services that carriers may market using CPNI without customer approval. In its petition, Bell Atlantic requests that we redefine protocol conversion as a telecommunications service. A protocol conversion assists terminals or networks operating with different protocols to communicate with each other. Bell Atlantic asserts that protocol conversions that do not alter the underlying information sent and received should not be defined as information services. We do not believe that protocol conversions should be redefined as a telecommunications service but because protocol conversions are necessary to the provision of the telecommunications service, in the instances where they are used, protocol conversions should be included in the group of information services listed above. Accordingly, we grant Bell Atlantic's request to use CPNI to market, without customer approval, protocol conversions. 3. Petitions for Forbearance a. Introduction 47. In the alternative, many parties urge the Commission to forbear from prohibiting CMRS providers and wireline carriers from using CPNI to market CPE and/or information services without customer approval. As we described in detail supra, section 10 of the Act requires the Commission to forbear from regulation when: (1) enforcement is not necessary to ensure that the carrier's charges and practices are just and reasonable; (2) enforcement is not necessary for the protection of consumers; and (3) forbearance is consistent with the public interest. b. CMRS Providers 48. In the preceding section, we granted the petitions for reconsideration to allow CMRS providers to use CPNI, without customer approval, to market CPE and information services to their customers. Therefore, we deny as moot the petitions for forbearance from section 222's prohibition against CMRS providers using CPNI to market, without customer approval, CPE and information services. c. Wireline Carriers 49. In the preceding section, we granted the petitions for reconsideration to allow wireline carriers to use CPNI, without customer approval, to market CPE and some information services to their customers. Therefore, we deny as moot the petitions requesting that we forbear from enforcing section 222's prohibition against wireline carriers to use CPNI to market CPE and information services such as call answering, voice mail or messaging, voice storage and retrieval services, fax storage and retrieval services, and protocol conversions. Bell Atlantic has requested that we forbear from enforcing section 222's prohibition against using CPNI without prior customer consent to market all information services. As explained below, we deny this request. 50. Section 10(a)(1). In support of its request for forbearance, Bell Atlantic argues that enforcement of the CPNI prohibition is not necessary to ensure that the charges, practices, classifications, or regulations are reasonable and non-discriminatory. Bell Atlantic states that the BOCs must obtain all underlying telecommunications services that they use to provide information services at the same unbundled tariff rates that are available to their competitors and that the BOCs are subject to similar nondiscrimination requirements with respect to the installation and maintenance of wireline telecommunications service in connection with information services as they are for CPE. 51. The primary focus of the CPNI rules is not, nor ever has been, intended to ensure reasonable rates or practices. Therefore, we determine that enforcement of the restrictions on the use of CPNI to market those information services that are not "necessary to, or used in, the provision of" telecommunications services are not necessary to ensure that the charges, practices, classifications, or regulations are just and reasonable and are not unjustly or unreasonably discriminatory. 52. Section 10(a)(2). Bell Atlantic contends that CPNI restrictions are not necessary to protect consumers because the use of CPNI would not result in unreasonable rates and because such use would be consistent with consumers' expectations. Bell Atlantic notes that consumers have benefitted for more than a decade from Bell company integrated provision of telecommunications and information services without the need for prior consent to use CPNI. They also argue that the information services market is competitive, thus obviating the need for any CPNI obligations, and that enforcement of such obligations would simply serve to confuse consumers by frustrating their efforts to easily obtain information about telecommunications and information services in the course of a single contact with a carrier representative. 53. We are unable to conclude that forbearing from enforcement of restrictions on the use of CPNI for marketing all information services would satisfy the second criterion. We note, however, that the "integrated" services that Bell Atlantic identifies include the information services which we have found above to be necessary to, or used in, the provision of the underlying telecommunications service. We have, on reconsideration, identified those types of information services for which our broader interpretation of section 222(c)(1)(B) is more in line with customer expectations and congressional intent. For these services, forbearance is not necessary. With regard to other information services such as Internet access, we find that enforcing section 222(c)(1)(B) is still necessary to protect consumers. Requiring prior consent protects customers in many instances where they would not realize potentially sensitive, personal information had been accessed or used. As noted above, there is no evidence, currently, that customers expect to receive such services from their wireline provider, or that they expect to use such services in the way that they expect to receive or use more integrated services. Nor are we aware of any other law, regulation, agency or state requirement that would substitute for the effectiveness of a prior consent requirement, which protects customer privacy expectations by placing the control over the use of CPNI for purposes of marketing non-integrated information services in the hands of the customer. 54. Section 10(a)(3). Bell Atlantic also argues that the Commission has already found, under Computer III, that it is in the public interest to permit the Bell Companies to use CPNI, subject to an "opt-out" option, because this approach enables Bell companies to engage in integrated marketing and sales of basic and enhanced services. Bell Atlantic asserts, therefore, that the Commission has already made the public interest finding required under section 10(a)(3). We concluded in the CPNI Order, however, that "[u]nlike the Commission's pre-existing policies under Computer III, which were largely intended to address competitive concerns, section 222 of the Act explicitly directs a greater focus on protecting customer privacy and control." We further concluded that "[t]his new focus embodied in section 222 evinces Congress' intent to strike a balance between competitive and customer privacy interests different from that which existed prior to the 1996 Act, and thus supports a more rigorous approval standard for carrier use of CPNI than in the prior Commission Computer III framework." More specifically, we concluded that an opt-out scheme does not provide any assurance that consent for the use of a customer's CPNI would be informed, and found that opt-out does not adequately protect customer privacy interests. Bell Atlantic, therefore, is incorrect in its assertion that our conclusions in Computer III dictate our findings relating to the public interest. We also conclude that the record on forbearance suggested here does not convince us that the privacy goals of the statute are met where carriers can use CPNI without express customer approval to sell services outside the existing customer-carrier relationship. We accordingly find that Bell Atlantic's request for forbearance of section 222's affirmative approval requirement is generally inconsistent with the public interest. Customers who are interested in obtaining more information can arrange to do so easily by granting consent for their carriers' use of CPNI. We have found no public interest benefits that would outweigh these concerns. 55. Pursuant to section 10(b) of the Act, we have evaluated whether forbearance from the prior consent requirement will promote competitive market conditions, including the extent to which forbearance will enhance competition among providers of telecommunications services. As we concluded above, the ability to use CPNI from an existing service relationship to market new services to a customer bestows an enormous competitive advantage for those carriers that currently have a service relationship with customers, particularly incumbent exchange carriers and interexchange carriers with a large existing customer base. This, in turn, poses a significant risk to the development of competition. Therefore, to the extent that Bell Atlantic is requesting forbearance from section 222's restrictions on the use of CPNI to market Internet access service, we find that such forbearance would neither promote competition nor enhance competition among telecommunications service providers. For instance, we recently stated that, although many Internet service providers (ISPs) "compete against one another, each ISP must obtain the underlying basic services from the incumbent local exchange carrier, often still a BOC, to reach its customers." Because of the competitive advantage that many BOCs retain, we concluded that we would not remove certain safeguards designed to protect against BOC discrimination despite the competitive ISP marketplace. We reach a similar conclusion here: giving wireline carriers, particularly ILECs, the right to use CPNI without affirmative customer approval to market Internet access services could damage the competitive Internet access services market at this point in time. Accordingly, we deny Bell Atlantic's petition for forbearance on this issue. d. Forbearance from all CPNI Rules for CMRS Providers 56. A few parties urge the Commission to forbear from imposing any CPNI obligations on CMRS providers. Forbearance from enforcing all CPNI rules against CMRS carriers, according to one petitioner, will permit many beneficial and pro-competitive marketing practices to continue. The Commission must forbear from enforcing its rules or any statutory provision where the criteria of the forbearance test, set out in Part V.A.3, infra, are satisfied. For the reasons discussed below, we deny this request. 57. Section 10(a)(1). According to 360ø Communications, CMRS providers are constrained by market forces from charging unjust or unreasonable prices or engaging in unreasonable practices because the CMRS marketplace is highly competitive. Customers who disapprove of a carrier's use of CPNI simply will change carriers. Thus, the argument goes, for a carrier to maintain its customer base, it must not abuse or improperly use CPNI. Bell Atlantic Mobile adds that these competitive forces in the CMRS market supplemented by sections 201 and 202 of the Act provide sufficient discipline against attempts to engage in unjust or unreasonable practices. Moreover, Arch claims that CPNI rules prevent CMRS carriers from marketing their services in the most efficient manner. The new rules, therefore, are unnecessary to prevent unreasonable or unjust carrier behavior. 58. As we have previously stated, the primary focus of the CPNI rules is not, nor ever has been, intended to ensure reasonable rates or practices. Therefore, we determine that enforcement of the CPNI rules for CMRS carriers is not necessary to ensure that the charges, practices, classifications, or regulations are just and reasonable and are not unjustly or unreasonably discriminatory. 59. Section 10(a)(2). 360ø Communications asserts that the new CPNI rules are unnecessary to protect the privacy interests of CMRS customers. In the absence of prior CPNI restrictions, CMRS customers have come to expect CMRS carriers to use their CPNI for "beneficial marketing practices" and, 360ø Communications further contends, that a sudden change in these practices will cause significant consumer confusion and harm. Arch avers that because of intense competition, CMRS carriers have every incentive to respect the privacy interests of their customers who can freely switch carriers. 60. We are unable to find that CMRS customers' privacy interests would be adequately protected absent section 222 and the rules promulgated in this proceeding. We are concerned, for example, that customers would be harmed by elimination of the restriction on carriers' use of CPNI to identify or track customers who call competing service providers contained in section 64.2005(b)(1) of our rules. Section 222 and our implementing rules protect customers in many instances where they would not realize potentially sensitive, personal information had been accessed or used. Moreover, we would be remiss in our duty under the statute if we created an environment in which CMRS customers' only recourse was to switch carriers after discovering that their CPNI had been used without authorization. Nor are we aware of any other law, regulation, agency or state requirement that would substitute for the effectiveness of our rules implementing section 222. Consequently, the second criterion for forbearance has not been met. 61. Section 10(a)(3). 360ø Communications argues that the public interest is served by the continuation of legitimate, beneficial marketing practices that have helped consumers manage their CMRS service costs and spurred competition by enabling carriers to differentiate themselves in the marketplace by offering new and enhanced service bundles. Arch asserts that the central issue raised by the CPNI rules is that they prevent each competitive CMRS carrier from treating each of its customers as a unique individual. 62. We do not find that forbearance from section 222 and our CPNI rules for all CMRS providers is consistent with the public interest. Complete forbearance would eliminate section 222's procedures for the protection of both customers and carriers, such as the process for transferring CPNI from a former carrier to a new carrier pursuant to a customer's written request and the obligation to protect carrier proprietary information. Pursuant to section 10(b) of the Act, we have evaluated whether forbearance from section 222 for CMRS carriers will promote competitive market conditions, including the extent to which forbearance will enhance competition among providers of telecommunications services. On one hand, forbearance could promote a free flow of information from the carrier to the consumer, potentially decreasing the carriers' costs of marketing. Increased competition for subscribers could result in the further reduction of rates, particularly in an already competitive market. On the other hand, it would appear that any such benefits would be marginal, at best, especially in light of the actions taken herein that reduce the regulatory impact of section 222 compliance and the continued importance of protecting consumers' privacy expectations. On balance, we find that forbearance from the full range of CPNI protections would undermine consumer privacy to an extent that outweighs the potential benefits demonstrated on the record in terms of carrier cost savings. Therefore, we conclude that there is insufficient basis for a public interest finding under the third criterion. C. Use of CPNI to Market to Former and "Soon-to-be Former" Customers 1. Background 63. The CPNI Order adopted section 64.2005(b)(3) to prohibit a carrier from using or accessing CPNI to regain the business of a customer who has switched to another provider. The Commission decided as a matter of statutory interpretation that once a customer terminates service from a carrier, CPNI derived from the previously subscribed service may not be used to retain or regain that customer. Specifically, the Commission foreclosed the use of CPNI for customer retention purposes under section 222(c)(1) because it felt such use was not carried out in the "provision of" service, but rather, for the purpose of retaining a customer that has already taken steps to change its provider. The CPNI Order also precluded the use of CPNI under section 222(d)(1), insofar as such use would be undertaken to market a service, rather than to "initiate" a service within the meaning of that provision. 64. A significant majority of the petitioners have requested that the Commission reconsider or forbear from the restrictions of section 64.2005(b)(3), which has been referred to as the "winback" prohibitions. As noted by various petitioners, the concept of "winback" can be divided into two distinct types of marketing: marketing intended either to (1) regain a customer or (2) retain a customer. Regaining a customer applies to marketing situations where a customer has already switched to and is receiving service from another provider. Retention marketing, by contrast, refers to a carrier's attempts to persuade a customer to remain with that carrier before the customer's service is switched to another provider. For the purposes of this section, we shall use the term "winback" to refer only to the first situation, where the customer has already switched to and is receiving service from another provider. 2. "Winback" a. Background 65. Petitioners challenge the winback restrictions on a variety of grounds. Some petitioners allege that the winback restrictions are not compelled by the statute and are antithetical to the concepts embodied in the Communications Act of 1934, as amended. Certain petitioners argue that if the Commission believes the winback rule is a reasonable interpretation of section 222, it should exercise its authority under section 10 to forbear from enforcing this provision because the anti-competitive effects outweigh any protection to customer privacy. Various parties argue that the Commission violated section 553 of the Administrative Procedures Act by promulgating winback rules without adequate notice, comment and explanation. Finally, a number of parties claim that the winback restrictions constitute an impermissible "taking" of their property rights under the Fifth Amendment. In contrast, other parties generally support the Commission's adoption of winback restrictions in some instances, but urge the Commission to place additional restrictions on ILEC use of CPNI. b. Discussion 66. On reconsideration, we conclude that all carriers should be able to use CPNI to engage in winback marketing campaigns to target valued former customers that have switched to other carriers. After reviewing the fuller record on this issue developed on reconsideration, we are persuaded that winback campaigns are consistent with section 222(c)(1) and in most instances facilitate and foster competition among carriers, benefiting customers without unduly impinging upon their privacy rights. Accordingly, we reverse our position and eliminate rule 64.2005(b)(3). 67. On reconsideration, we believe that section 222(c)(1)(A) is properly construed to allow carriers to use CPNI to regain customers who have switched to another carrier. While section 222(c)(1) is susceptible to different interpretations, we now think that the better reading of this language permits use of CPNI of former customers to market the same category of service from which CPNI was obtained to that former customer. We agree with those petitioners who argue that the use of CPNI in this manner is consistent with both the language and the goals of the statute. Section 222(c)(1)(A) permits the use of CPNI in connection with the "provision of the telecommunications service from which the information is derived." The marketing of service offerings within a given presubscribed telecommunications service is encompassed within the "provision of" that service. In developing the total service approach, the Commission recognized that marketing is implicit in the term "provision" as used in section 222(c)(1). The CPNI Order stated that "we believe that the best interpretation of section 222(c)(1) is the total service approach, which affords carriers the right to use or disclose CPNI for, among other things, marketing related offerings within customers' existing service for their benefit and convenience." While we recognize that this discussion in the CPNI Order also referred to the customer's "existing" service, we now conclude upon further reflection that our focus should not be so limited. Common sense tells us that customers are aware of and expect that their former carrier has information about the services to which they formerly subscribed. Businesses do not customarily purge their records of a customer when that customer leaves. We therefore disagree with ALTS' assertion that extending winback marketing for the same service to a former customer is an indefensible stretch of the total service approach. 68. Because customer expectations form the basis of the total service approach, they properly influence our understanding of the statute, a goal of which is to balance competitive concerns with those of customer privacy. Customers expect carriers to attempt to win back their business by offering better- tailored service packages, and that such precise tailoring is most effectively achieved through the use of CPNI. Winback restrictions may deprive customers of the benefits of a competitive market. Winback facilitates direct competition on price and other terms, for example, by encouraging carriers to "out bid" each other for a customer's business, enabling the customer to select the carrier that best suits the customer's needs. 69. Some commenters argue that ILECs should be restricted from engaging in winback campaigns, as a matter of policy, because of the ILECs' unique historic position as regulated monopolies. Several commenters are concerned that the vast stores of CPNI gathered by ILECs will chill potential local entrants and thwart competition in the local exchange. We believe that such action by an ILEC is a significant concern during the time subsequent to the customer's placement of an order to change carriers and prior to the change actually taking place. Therefore, we have addressed that situation at Part V.C.3, infra. However, once a customer is no longer obtaining service from the ILEC, the ILEC must compete with the new service provider to obtain the customer's business. We believe that such competition is in the best interest of the customer and see no reason to prohibit ILECs from taking part in this practice. 70. We are also unpersuaded by the allegations that an incumbent carrier's use of CPNI in winback campaigns amounts to a predatory practice designed to prevent effective market entry by new competitors. Contrary to the commenters' suggestions, we believe such use of CPNI is neither a per se violation of section 201 of the Communications Act, as amended, nor the antitrust laws. While excessively low pricing and other exclusionary practices may contravene antitrust law, commenters proffer neither facts nor convincing arguments that their legal conclusion is a realistic concern. Prior to the adoption of the rules promulgated under 1996 Act, incumbent carriers were able to use CPNI to regain customers lost to competitors. Assuming incumbent LECs have sufficient market power to engage in predatory strategies, they are constrained in their ability to raise and lower prices by our tariff rules and non-discrimination requirements. Because winback campaigns can promote competition and result in lower prices to consumers, we will not condemn such practices absent a showing that they are truly predatory. 71. Thus, we conclude that the statute permits a carrier evaluating whether to launch a winback campaign to use CPNI to target valued former customers who have switched service providers. The carrier legitimately obtained that CPNI in its capacity as the customer's telecommunications provider. Importantly, such CPNI use does not impact customer privacy in any substantial respect because the former customer-carrier relationship previously enabled the carrier to use this same telecommunications usage information. We believe this interpretation of section 222(c)(1) best comports with notions of consumer privacy, competition and customer control. 72. An important limitation derived from the statutory language is that the carrier may use CPNI of the former customer to offer that customer the service or services to which the customer previously subscribed. It would be inconsistent with the total service approach for a carrier to use such CPNI to offer new services outside the former customer-carrier relationship. 73. Some petitioners assert that winback is permissible under the exceptions enumerated in Section 222(d)(1) that allow the use of CPNI without customer approval to "render" or "initiate" service. Based upon our decision that the use of CPNI to winback customers is consistent with section 222(c)(1), we decline to reach these arguments. Similarly, we need not address arguments concerning the constitutionality of, propriety under the APA, and forbearance from, the former rule. Consequently, we eliminate section 64.2005(b)(3). We therefore do not need to reach the clarification petitions submitted on the former rule. 3. Retention of Customers a. Background 74. As noted above, the CPNI Order also prohibited a carrier's access to or the use of the CPNI of a "soon-to-be-former" customer to market the same services to retain that customer. The CPNI Order did not distinguish between marketing for the purpose of retaining customers versus regaining them. As explained above, on reconsideration, we believe that use of CPNI to regain former customers falls within the ambit of section 222(c)(1). We conclude here that use of CPNI to retain customers ordinarily does not come under section 222(c)(1), and in such instances would likely violate section 222(b). 75. Several petitioners ask the Commission to reconsider Section 64.2005(b)(3) to permit use of CPNI for the retention of soon-to-be former customers without customer approval. On the other hand, other petitioners request that the Commission expressly prohibit ILECs from engaging in retention marketing. These petitioners claim that ILECs are using information derived solely from their status as providing carrier-to-carrier services to their competitors in an anti-competitive manner. Petitioners argue that the use of another carrier's order, including a carrier or customer request to lift a PIC freeze, is clearly and separately forbidden by sections 222(b) and 201(b). As a remedy, MCI suggests, and both TRA and Intermedia agree, that the Commission should conclude that CPNI includes the identity of a chosen carrier. Intermedia urges the Commission to mandate that ILECs maintain a bright-line separation between ILEC presubscription operations, retail operations, and wholesale operations. b. Discussion 76. We conclude that section 222 does not allow carriers to use CPNI to retain soon-to-be former customers where the carrier gained notice of a customer's imminent cancellation of service through the provision of carrier-to-carrier service. We conclude that competition is harmed if any carrier uses carrier- to-carrier information, such as switch or PIC orders, to trigger retention marketing campaigns, and consequently prohibit such actions accordingly. Congress expressly protected carrier information in section 222(a) by creating a duty to protect the confidentiality of proprietary information of other carriers, including resellers. Section 222(b) restricts the use of such proprietary information and contains an outright prohibition against the use of such information for a carrier's own marketing efforts. As stated in the CPNI Order, Congress' goals of promoting competition and preserving customer privacy are furthered by protecting competitively-sensitive information of other carriers, including resellers and information service providers, from network providers that gain access to such information through their provision of wholesale services. 77. The Commission previously determined that carrier change information is carrier proprietary information under section 222(b). In the Slamming Order, the Commission stated that pursuant to section 222(b), the carrier executing a change "is prohibited from using such information to attempt to change the subscriber's decision to switch to another carrier." Thus, where a carrier exploits advance notice of a customer change by virtue of its status as the underlying network-facilities or service provider to market to that customer, it does so in violation of section 222(b). We concede that in the short term this prohibition falls squarely on the shoulders of the BOCs and other ILECs as a practical matter. As competition grows, and the number of facilities-based local exchange providers increases, other entities will be restricted from this practice as well. 78. We agree with SBC and Ameritech that section 222(b) is not violated if the carrier has independently learned from its retail operations that a customer is switching to another carrier; in that case, the carrier is free to use CPNI to persuade the customer to stay, consistent with the limitations set forth in the preceding section. We thus distinguish between the "wholesale" and the "retail" services of a carrier. If the information about a customer switch were to come through independent, retail means, then a carrier would be free to launch a "retention" campaign under the implied consent conferred by section 222(c)(1). c. Petitions for Forbearance 79. A number of petitioners seek forbearance from restrictions that limit the ability of a carrier to retain a soon-to-be former customer who has indicated an intent to switch carriers. Petitioners request forbearance from the application of rules prohibiting retention marketing, however, as part of their overall requests that the Commission forbear from applying winback restrictions generally. Because the Commission has revised its interpretation and eliminated rule 64.2005(b)(3), that portion of their petitions is moot. 80. As we described in detail supra, section 10 of the Act requires the Commission to forbear from regulation when: (1) enforcement is not necessary to ensure that the carrier's charges and practices are just and reasonable; (2) enforcement is not necessary for the protection of consumers; and (3) forbearance is consistent with the public interest. For the reasons discussed below, we conclude the forbearance standard has not been met to the extent that carriers would seek to use CPNI to regain a soon-to-be former customer, precipitated by the receipt of a carrier-to-carrier order. 81. Section 10(a)(1). Petitioners assert that limiting the use of CPNI in retention efforts is not necessary to ensure just, reasonable, and nondiscriminatory rates. For example, Bell Atlantic asserts that when a carrier attempts to retain a customer who has decided to switch to a competitor, a carrier will likely offer the customer lower, or at least not higher, rates than the customer was previously receiving. Because these same rates have to be available to other customers, Bell Atlantic reasons that by definition there can be no discrimination. GTE adds that because the rule has nothing to do with pricing, elimination of the rule cannot have a negative effect on pricing, and that the rule works to prevent carrier initiated price breaks. 82. We agree with GTE that the primary focus of the CPNI rules is not, nor ever has been, intended to ensure reasonable rates or practices. Therefore, we determine that enforcement of section 222's prohibition against allowing a carrier to use proprietary information that it receives by virtue of fulfilling carrier-to-carrier orders in a "wholesale" capacity is not necessary to ensure that the charges, practices, classifications, or regulations are just and reasonable and are not unjustly or unreasonably discriminatory. 83. Section 10(a)(2). Petitioners assert that retention restrictions are not necessary to protect customers generally. Bell Atlantic argues that use of CPNI for retention aids in the early detection of slamming. In the Slamming Order, however, the Commission cited concern that executing carriers would have the incentive and ability to delay or deny carrier changes, using the detection of slamming as an excuse in order to benefit themselves or their affiliates. In addition, GTE asserts that there are no privacy concerns in a retention situation. Although we agree that privacy concerns are not particularly jeopardized in winback situations, generally, that does not mean that enforcement of this restriction is unnecessary to protect customers. Rather, we conclude that consumers' substantial interests in a competitive and fair marketplace would be undermined if this restriction was not enforced. Consequently, the second criterion is not satisfied. 84. Section 10(a)(3). Finally, petitioners contend that customer retention is in the public interest. We are not persuaded, however, that permitting carriers to unfairly use information that they obtain in a "wholesale" capacity is in the public's interest. First, Bell Atlantic and CTIA assert that customer retention campaigns place consumers in the attractive position of having two competitors simultaneously vying for the consumers' business. Although we acknowledge that in the short-run allowing carriers to use carrier proprietary information to trigger retention campaigns may result in lower rates for some individual customers, for the reasons stated above we do not believe that this would be the result over the long-term. Moreover, CTIA adds that forbearance is consistent with the public interest and Commission precedent because it will prevent CMRS carriers from incurring the significant costs of revamping their marketing practices. According to CTIA, the Commission has twice determined that cost savings to carriers from forbearance supports a section 10(a) public interest finding. We do not agree that permitting incumbent carriers to save costs at the expense of competing carriers, as would be the case under these circumstances, is in the public interest. We conclude that there is insufficient basis for a public interest finding in this instance under the third criterion. Therefore, we deny the forbearance petitions on this issue. D. Disclosure of CPNI to New Carriers When a Customer is "Won" 85. In the CPNI Order we definitively concluded that the term "initiate" in section 222(d)(1) does not require that a customer's CPNI be disclosed by a carrier to a competing carrier who has "won" the customer as its own. We found that section 222(d)(1) applies only to carriers already possessing the CPNI, within the context of the existing service relationship, and not to any other carriers merely seeking access to CPNI. We noted, however, that section 222(c)(1) does not prohibit carriers from disclosing CPNI to competing carriers upon customer approval. Accordingly, we reasoned that although an incumbent carrier is not required to disclose CPNI pursuant to section 222(d)(1) or section 222(c)(2) absent an affirmative written request, local exchange carriers may need to disclose a customer's service record upon oral approval of a customer to a competing carrier prior to its commencement of service as part of a local exchange carrier's section 251(c)(3) and (c)(4) obligations. In this way, we concluded, section 222(c)(1) permits the sharing of customer records necessary for the provisioning of service by a competitive carrier. Finally, we also noted that a carrier's failure to disclose CPNI to a competing carrier that seeks to initiate service to that customer who wishes to subscribe to a competing carrier's service, may well constitute an unreasonable practice in violation of section 201(b), depending on the circumstances. 86. We reject MCI's various requests for disclosure of CPNI by former carriers, without customer approval, to new carriers to enable the new carriers to initiate service. TRA supports some of, and several carriers oppose some or all of MCI's requests. For the reasons stated below, we deny MCI's petition in this regard. 87. First, MCI and TRA ask that we find that section 222(d)(1) allows "one carrier to disclose CPNI to another to enable the latter to initiate service without customer approval" thereby reversing our conclusion in the CPNI Order. Neither MCI nor TRA has presented any new facts or arguments that the Commission did not fully consider in the CPNI Order regarding the interpretation of section 222(d)(1). We therefore deny MCI and TRA's request that we reverse this portion of the CPNI Order. 88. Second, MCI also requests that the Commission, in any case, find that section 222(c)(1) authorizes the disclosure of CPNI without customer approval. MCI argues that the disclosure of CPNI by a carrier in order for another carrier to initiate the same category of service as the disclosing carrier falls within "the [disclosing carrier's] provision of" service under section 222(c)(1)(A) and is, therefore, permitted in the absence of customer approval. We find that MCI's request is contrary to our conclusion in the CPNI Order that the language of 222(c)(1)(A) reflects Congress' judgment that customer approval for carriers to use, disclose, and permit access to CPNI can be inferred in the context of an existing customer relationship. We reasoned that such an inference is appropriate because the customer is aware that his or her carrier has access to CPNI, and, through subscription to the carrier's service, has implicitly approved the carrier's use of CPNI within the existing relationship. We are not persuaded that the disclosure of CPNI to a different carrier to initiate service without customer approval for that disclosure would be contemplated by a customer as a carrier's use of his or her CPNI within the existing customer-carrier relationship. As such, we deny MCI's request. 89. Third, MCI also asserts that sections 272, 201(b), and 202(a) require BOCs and other ILECs that disclose CPNI to affiliates without customer approval in order to initiate service to likewise disclose CPNI to any other requesting carrier "needing it to initiate service." As described above, the CPNI Order stated that a carrier's failure to disclose CPNI to a competing carrier that seeks to initiate service to a customer who wishes to subscribe to a competing carrier's service may well constitute an unreasonable practice in violation of section 201(b), depending on the circumstances. Moreover, we discuss at length the interaction of sections 272 and 222 elsewhere in this order, and affirm our previous conclusion that section 272 imposes no additional CPNI requirements on BOCs sharing CPNI with their section 272 affiliates. MCI has not provided any reasonable basis for altering these conclusions. Further, we are not persuaded by MCI's unsupported request that section 202(a) would require such relief. Accordingly, we deny MCI's request. 90. Fourth, MCI further argues that if the Commission does not grant any of the relief requested, then it should allow carriers to notify customers that their failure to approve the disclosure of CPNI to a new carrier may disrupt the installation of any new service they may request. MCI concludes that this would require a modification of the CPNI Order's requirement that notification of a customer's CPNI rights should not imply that approval is necessary to ensure the continuation of services to which the customer subscribes or the proper servicing of the customer's account. As MCI has not persuaded us, however, that a customer's failure to approve such a disclosure may disrupt the installation of service, we deny MCI's request. 91. Finally, MCI requests that the Commission "reconfirm" that CPNI is an unbundled network element "that BOCs and other ILECs must provide to all requesting carriers under section 251(c)(3) of the Act." This is not a fair characterization of the CPNI Order's conclusion. Rather, the CPNI Order held that local exchange carriers may need to disclose a customer's service record upon oral approval of a customer to a competing carrier prior to its commencement of service as part of a local exchange carrier's section 251(c)(3) and (c)(4) obligations. This conclusion does not indicate, as MCI has implied, that CPNI is an unbundled network element subject to section 251(c)(3)'s unbundling requirements separate from the Commission's requirement that incumbent carriers provide unbundled access to operations support systems and the information they contain. Therefore, MCI incorrectly concludes that the CPNI Order found that CPNI is an unbundled network element. In any case, the United States Supreme Court recently concluded that the Commission's unbundling rule, section 51.319 of the Commission's rules, should be vacated. As a result, the Commission reopened CC Docket 96-98 to refresh the record on the issues of (1) how, in light of the Supreme Court ruling, the Commission should interpret the standards set forth in section 251(d)(2) of the Telecommunications Act of 1996; and (2) which specific network elements the Commission should require incumbent LECs to unbundle. VI. "APPROVAL" UNDER SECTION 222(c)(1) A. Grandfathering Pre-existing Notifications 92. On May 21, 1998, the Common Carrier Bureau released the Clarification Order clarifying several issues in the CPNI Order. Among other things, the Clarification Order made it clear that carriers that have complied with the Computer III notification and prior written approval requirements in order to market enhanced services to business customers with more than 20 access lines are also in compliance with section 222 and the Commission's rules. CompTel and LCI request that the Commission reverse the Clarification Order's conclusion. We decline to do so for the reasons discussed below and, in fact, hereby adopt the Clarification Order. 93. As discussed in the Clarification Order, the framework established under the Commission's Computer III regime, prior to the adoption of section 222, governed the use of CPNI by the BOCs, AT&T, and GTE to market CPE and enhanced services. Under this framework, those carriers were obligated to: (1) provide an annual notification of CPNI rights to multi-line customers regarding enhanced services, as well as a similar notification requirement that applied only to the BOCs regarding CPE; and (2) obtain prior written authorization from business customers with more than 20 access lines to use CPNI to market enhanced services. The CPNI Order, however, replaced the Computer III CPNI framework in all material respects. In its place, the CPNI Order established requirements compelling carriers to provide customers with specific one-time notifications prior and proximate to soliciting express written, oral, or electronic approval for CPNI uses beyond those set forth in sections 222(c)(1)(A) and (B). The CPNI Order further established an express approval mechanism for such solicitations as it is the "best means to implement this provision because it will minimize any unwanted or unknowing disclosure of CPNI" and will also "limit the potential for untoward competitive advantages by incumbent carriers." 94. The Clarification Order noted that, like the requirements established in the CPNI Order, "the notification obligation established by the Computer III framework required, among other things, that carriers provide customers with illustrative examples of enhanced services and CPE, expanded definitions of CPNI and CPE, information about a customer's right to restrict CPNI use at any time, information about the effective duration of requests to restrict CPNI, and background information to enable customers to understand why they were being asked to make decisions about their CPNI." The Clarification Order determined that these Computer III notifications comply materially with the form and content of the notices required by the CPNI Order. In addition, the Clarification Order concluded that the Computer III requirement to obtain prior written authorization constitutes a form of express, affirmative approval, as required by section 222. Accordingly, the Clarification Order concluded that carriers that complied with the Computer III notification and prior written approval requirement in order to market enhanced services to such carriers are also in compliance with section 222 and the Commission's rules. 95. CompTel, LCI, and Intermedia assert that the Computer III authorizations received from business customers with more than 20 lines are invalid and, as such, that conclusion of the Clarification Order should be reversed. In support of their positions, they all note that the CPNI Order rules require that notification be proximate to and precede customer authorization, although that was not required under the Computer III regime. Moreover, CompTel asserts, the rules promulgated under section 222 require that carriers inform customers that their service will not be affected by refusing to sign CPNI waivers "whereas BOCs frequently told customers they might have to change account representatives if they did not grant a waiver." Finally, LCI and Intermedia argue that as the Computer III consents were given prior to the advent of local competition, business customers may have felt "compelled" to grant consent in a monopoly environment. For these reasons, CompTel and LCI assert that the Computer III consents at issue were not "informed." 96. Ameritech opposes reversing the Clarification Order, arguing that even the rules promulgated under the CPNI Order do not require that customer authorizations "evaporate" in the event that the competitive environment changes. Furthermore, Ameritech contends that when BOCs informed customers that they may have to change account representatives if they did not waive their CPNI rights it was probably the result of the Commission's "mechanical blocking" requirements for personnel that were involved in the marketing of enhanced services. Bell Atlantic also opposes reversing the Clarification Order in this respect, arguing that the notifications followed the rules then in effect and that customers were told that their authorizations were effective until revoked. Bell Atlantic argues that there is no public interest reason to require carriers and customers to repeat the affirmative authorization process. 97. We agree with the Bureau that carriers that have complied with the Computer III notification and prior written approval requirements in order to market enhanced services to certain large business customers should be deemed in compliance with section 222 and the Commission's rules. For the reasons stated in the Clarification Order, we agree that the Computer III framework required carriers to provide these large business customers with adequate notice and obtain express, affirmative approval in material compliance with the form and content of those required by section 222 and the Commission's rules. Although it is true that the Computer III consents were given prior to the advent of local competition, we believe that the detailed notice and express, affirmative consent required under that regime compensate for this deficiency. Moreover, we are not persuaded by CompTel's assertion that the BOCs warnings that they may have to change the customer's account representatives put undue pressure on these business customers to relent. Finally, we also conclude that although some of the Computer III annual notifications may not have been "proximate to" the carrier solicitations as required by section 222, the Computer III regime's annual notification requirement and limitation to business customers with more than 20 access lines requirements that we note are more stringent than required by section 222 materially satisfy the concerns we intended to address by the proximate notification requirement promulgated in the CPNI Order. As such, we agree with the Bureau that the Computer III notifications are in material compliance with section 222 and the Commission's rules, and adopt the reasoning and conclusions of the Clarification Order as our own. 98. Other carriers request that the Commission "grandfather" authorizations obtained subsequent to the enactment of section 222, but prior to the promulgation of rules in the CPNI Order. AT&T requests that the Commission clarify that the rules promulgated in the CPNI Order have prospective application only and, as such, that AT&T may continue to rely on approvals it obtained from customers in an attempt to comply with section 222 prior to the CPNI Order. Bell Atlantic, CWI, and Sprint support AT&T's request. All four of these carriers argue that it would be confusing to customers and a waste of resources to require the resolicitation of these authorizations. U S WEST and GTE agree that such authorizations should be grandfathered, but only where they are in writing. In contrast, however, MCI opposes any grandfathering. 99. Several carriers requesting that we "grandfather" these authorizations have provided descriptions of varying detail of their solicitations. AT&T's description was the most detailed. Subsequent to the enactment of section 222, but prior to the CPNI Order, AT&T apparently solicited millions of its customers for consent to use their CPNI to market new products and services to them by reading prepared solicitations to them over the phone during inbound and outbound calls. AT&T's various versions of its script all essentially stated that AT&T would like to inform the customer about "other" AT&T products and services from time-to-time and requested permission to use the customer's "account information" to aid in this purpose. AT&T argues that the "non-trivial" percentage of customers who declined to authorize the use of their CPNI indicates that customers "understood AT&T's explanation, understood their rights, and where it was given consent was informed." To "ameliorate" the possibility that customers may not have been fully advised of their rights, AT&T has offered to send customers who gave their approval to AT&T's solicitations written notices of their rights including an explanation that they have a right to withdraw their approval. We conclude, based upon the evidence presented in the record of this proceeding, that AT&T's solicitations constitute a good faith effort to materially comply with section 222 provided they are supplemented with the curative written notification of rights AT&T has offered to distribute. Accordingly, we find that AT&T may continue to rely on the approvals given, provided the approvals were obtained in the manner detailed above, so long as AT&T supplements those approvals with a written notice to customers of their rights including an explanation that they have the right to withdraw their approval. 100. The descriptions provided by the other carriers are too brief to analyze whether their solicitations were adequate. For example, Sprint only states that it "informed [several hundred thousand] customers that they had to give their permission to enable Sprint to review their account information in order to inform them about other Sprint-branded services and products." CWI merely states that it "requested CPNI use approval from consumers who became customers after the 1996 Communications Act was enacted" and that it "amended its order forms to include a CPNI notice and approval section in its terms and conditions." Finally, Bell Atlantic briefly notes that it "provided written notice to thousands of its customers of their CPNI rights and secured written release from many of those customers." We conclude that these descriptions are inadequate to make a determination about whether the notices given and the solicitations made are in material compliance with section 222. 101. Other than AT&T, the parties in this proceeding have not provided sufficient detail describing their solicitations for the Commission to make a determination of material compliance. We urge them to examine the showing made by AT&T as discussed above. We will accept further waiver requests that are materially compliant with section 222, provided the carriers requesting waivers can make a showing similar to the one made by AT&T. B. Oral and Written Notification 1. Background 102. Section 64.2007 of the Commission's Rules sets out several requirements for carriers who wish to obtain a customer's consent for the use of that customer's CPNI. Carriers must obtain customer approval to use, disclose, or permit access to CPNI for marketing purposes. Prior to seeking customer approval, however, carriers must provide a one-time notification to the customer of her or his rights to restrict the use or disclosure of, and access to, her or his CPNI. Carriers may provide oral or written notification. Once a customer is notified of her or his rights, the carrier may undertake a solicitation of the customer's approval. Solicitation for approval must be proximate to the notification. If the solicitation for approval is written, then it "must not be on a document separate from notification," even if the solicitation is included in the same envelope. 103. Vanguard requests that the Commission clarify the requirements established in the Order for telecommunications providers seeking customer consent for the use of CPNI. Vanguard expresses concern that the rules will hinder providers from obtaining consent at the time of the execution of initial customer agreements. Specifically, Vanguard requests clarification that: it would be appropriate to provide customers with a basic disclosure of the nature of their CPNI rights at or near the signature line of a customer agreement, with both a specific, direct reference to a more complete disclosure elsewhere in the document and an opportunity for the customer to choose whether or not to consent to the use of that customer's CPNI. U S WEST opposes the clarification requested by Vanguard on the grounds that carriers should be left with flexibility in implementing the rules, and a notification in the body of the contract could be just as compliant as at the signature line. 104. GTE requests clarification of the "one-time" notification rules, noting that, under section 64.2007(f)(3), solicitation of approval to use CPNI must be proximate to the notification of a customer's CPNI rights. Further, section 64.2007(f)(4) requires that, if the solicitation for consent is in writing, then it must be in the same notification document. GTE concludes that these rules conflict oral requests for consent can follow written notification at any time proximate to the notification, which GTE interprets as within one year of the solicited consent, but written requests for consent cannot (i.e., they must be in the same document as the written notification). GTE requests that the Commission "clarify that written notice followed proximately by either written or oral solicitation is sufficient and is consistent with the FCC's finding that `one-time' notice is sufficient." GTE contends that this would require amending section 64.2007(f)(4). 105. SBC also requests that the Commission clarify that written notification followed by either an oral or written solicitation for approval is appropriate under the one-time notification scheme. SBC posits that, as both oral and written notification offer advantages over the other in particular circumstances, it is preferable to furnish providers with the flexibility to use either approach. Frontier asserts that the Commission "did not justify" the requirement that written solicitations for approval to use CPNI be in the same document as written notifications. Frontier argues that the Commission indicated elsewhere in the Order that notification must be made prior to solicitation, notification is required only once, and carriers may solicit customers multiple times. Frontier suggests that the Commission may have meant to require that if the solicitation and notification are contained in the same document, then the notification must come first. Finally, from a policy perspective, Frontier claims that this rule provides an incentive for carriers to rely upon less reliable and auditable oral notifications. 106. Omnipoint requests that, for CMRS providers, the Commission replace its "opt-in" requirement for approval of the use of CPNI with an "opt-out" rule. MCI opposes Omnipoint's proposal, claiming that the CMRS market doesn't present any better case for "opt-out" than does the wireline market, that an "opt-out" proposal would favor large carriers with greater CPNI resources, and that carriers are not likely to solicit approvals so intrusively as to drive their customers away. 2. Discussion 107. We find that Omnipoint has presented no new circumstances that warrant reversal of the Commission's conclusion that the requirement of affirmative consent is consistent with Congressional intent, as well as with the principles of customer control and convenience. Nor has Omnipoint shown that wireless carriers should not be subject to the requirement of affirmative consent. 108. We conclude, however, that the Commission should not attempt to micro-manage the methods by which carriers meet their obligations to secure customer consent. As long as the carrier can show that the rules previously promulgated, which ensure that the customer has been clearly notified of his or her right to refuse consent before the CPNI is used and that the notification clearly informs the customer of the consequences of giving or refusing consent, have been complied with, the consent will be effective. However, we note that those rules are specific in the requirements for written notification, e.g., that the notice must be clearly legible, use sufficiently large type, and be placed in an area so as to be readily apparent to the customer. We intend to be vigilant in enforcing these rules, as we have in enforcing the rules against slamming, which similarly provide for clear and unambiguous notice to the telephone subscriber who signs a letter of agency for authorizing a change in his or her primary interexchange carrier. This policy is also consistent with the Commission's recent action to help ensure that consumers are provided with essential information in phone bills in a clear and conspicuous manner. We will entertain complaints that carriers have not met these requirements on a case-by-case basis. 109. We clarify, at Vanguard's request, that its plan for obtaining consent at the time of the execution of initial customer agreements would be appropriate assuming Vanguard provides "complete disclosure" prior to seeking customer approval as required by section 64.2007(f) of the Commission's rules, and is otherwise compliant with the remainder of section 64.2007. In other words, seeking customer consent at the time of execution of initial customer agreements is not prohibited by our rules. We also concur with U S WEST's assertion, however, that carriers should be left with flexibility in implementing our rules. Accordingly, Vanguard's proposal is merely one option among many that could comply with our rules. 110. Moreover, in keeping with our desire to avoid micro-management of the notification and authorization process, we shall grant SBC, Frontier, and GTE's requests that we eliminate section 64.2007(f)(4) of the Commission's rules. Section 64.2007(f)(4) requires that a carrier provide a solicitation for approval to use a customer's CPNI, if written, in the same document containing the one-time notification of the customer's CPNI rights. These carriers argue that this section results in some confusion when read with the rest of section 64.2007. We agree that section 64.2007(f)(4) appears to contradict section 64.2007(f)(1) of our rules, which permits carriers to provide notification though oral, as well as written methods. Moreover, we agree with Frontier that the rule may create a disincentive for carriers to rely upon less reliable and auditable oral notifications. Of course, this was not our intent. In light of these reasons, and our desire avoid micro-management, we will delete section 64.2007(f)(4) from our rules. C. Preemption of State Notification Requirements 111. In the CPNI Order, we declined to exercise our preemption authority, although we concluded that in connection with CPNI regulation we "may preempt state regulation of intrastate telecommunications matters where such regulation would negate the Commission's exercise of its lawful authority because regulation of the interstate aspects of the matter cannot be severed from the intrastate aspects." Rather, we stated that we would examine any conflicting state rules on a case-by-case basis once the states have had an opportunity to review the requirements we adopted in the CPNI Order. At that time we noted that state rules that are vulnerable to preemption are those that (1) permit greater carrier use of CPNI than section 222 and the Commission's rules allow, or (2) seek to impose additional limitations on carriers' use of CPNI. We also indicated, however, that state rules that would not directly conflict with the balance or goals set by Congress were not vulnerable to preemption. Such a rule, for example, might specify information that must be contained in the carrier's notice in addition to the information specified in the CPNI Order. 112. On reconsideration, we affirm our decision to exercise our preemption authority on a case-by-case basis. We reject AT&T's request that the Commission "revisit [its] conclusion and hold that the FCC notice requirements are preemptive and that a state may not prescribe additional notice requirements." AT&T argues that not doing so could put carriers at risk of expending millions of dollars soliciting customer approvals only to find that the notice does not comply with subsequently enacted state requirements. While it is possible that states might impose additional CPNI conditions that could require the expenditure of resources, we conclude it would be inappropriate for the Commission to speculate in this proceeding about what such conditions might be and how much compliance might cost. AT&T further asserts that, at a minimum, the Commission should hold that any additional state requirements should have prospective effect only, and may not serve to invalidate CPNI authorizations previously and validly obtained in accordance with section 222 and the Commission's rules. We note that while deciding to address preemption requests on a case-by-case basis, we reserve the right to consider the potential costs and burdens imposed by any state requirements that would apply retroactively. For these same reasons, we also deny GTE's request that we find that "additional CPNI use restrictions will be expeditiously preempted, particularly where other federal statutes, such as 47 U.S.C.  227(c), already address customer privacy concerns." 113. Neither AT&T nor GTE has presented any new facts or arguments that require us to reconsider our prior ruling. Both GTE and AT&T point to the Comments of the Texas Public Utility Commission, which describe and attach a CPNI rule under consideration by the Texas Commission, as support for the need to reconsider our conclusion on preemption in the CPNI Order. They assert that the proposed Texas rule is in conflict with the CPNI Order and the Commission's rules. That Texas, or any other state, might implement CPNI rules that may be in conflict with our rules was certainly considered in the CPNI Order. If such an event occurs, AT&T, GTE, or any other party may request that we preempt the alleged conflicting rules. We will then consider the specific circumstances at that time. D. Details of CPNI Notice 114. Section 64.2007 of our rules establishes the minimum form and content requirements of the notification a carrier must provide to a customer when seeking approval to use CPNI. Section 64.2007(f)(2)(ii) requires that the notification must specify, inter alia, "the types of information that constitute CPNI" and "the specific entities" that will receive it. GTE requests that the Commission clarify the rule to permit carriers to avoid exhaustively specifying all types of CPNI and all of a carrier's subsidiaries and affiliates that may receive CPNI. We decline to do so. The minimum requirements of section 64.2007 were not crafted to provide precise guidance, but rather as general notice requirements. The rule seeks to strike an appropriate balance between giving carriers flexibility to craft CPNI notices tailored to their business plans and ensuring that customers are adequately informed of their CPNI rights. 115. Thus, at a minimum, a carrier must inform a customer of the types of CPNI it intends to use. We wish to ensure that any decision by a customer to grant or deny approval is fully informed and that we reduce the potential for carrier abuse. Also, to the extent a carrier intends to disseminate a customer's CPNI, the customer has a right to know the entities that will receive the CPNI derived from his or her calling habits. Contrary to GTE's assertion, we don't believe that a customer necessarily will be confused by the name of the recipient. Importantly, the customer should have the option of restricting access to CPNI among the carrier's intended recipients of his or her personal information. VII. SAFEGUARDS UNDER SECTION 222 A. Background 116. In the CPNI Order, the Commission concluded that "all telecommunications carriers must establish effective safeguards to protect against unauthorized access to CPNI by their employees or agents, or by unaffiliated third parties." To this end, we required carriers to develop and implement software systems that "flag" customer service records in connection with CPNI, and maintain an electronic audit mechanism ("audit trail") that tracks access to customer accounts. In addition, the CPNI Order stated that carriers were to: train their employees as to when it would be permissible to access customers' CPNI; establish a supervisory review process that ensures compliance with CPNI restrictions when conducting outbound marketing; and, on an annual basis, submit a certification signed by a current corporate officer attesting that he or she has personal knowledge that the carrier is in compliance with the Commission's requirements. Because the Commission anticipated that carriers would need time to conform their data systems and operations to comply with the software flags and electronic audit mechanisms required by the Order, we deferred enforcement of those rules until eight months from when the rules became effective: specifically, January 26, 1999. 117. Following the release of the CPNI Order, several petitioners sought reconsideration of a variety of issues, including the decision to require carriers to implement the use of flags and audit trails. Other carriers sought reconsideration of the CPNI Order's employee training and discipline requirement in section 64.2009(b) of the Commission's rules, as well as the supervisory review requirement in section 64.2009(d) of the Commission's rules. On September 24, 1998, in response to concerns raised by a number of parties, the Commission ruled in the Stay Order that it would not seek enforcement actions against carriers regarding compliance with the CPNI software flagging and audit trail requirements as set forth in 47 C.F.R. Section 64.2009(a) and (c) until six months after the release date of this order on reconsideration. We concluded that it serves the public interest to extend the deadline for the initiation of enforcement of the software flagging and audit trail rules so that the Commission could "consider recent proposals to tailor our requirements more narrowly and to reduce burdens on the industry while serving the purposes of the CPNI rules." 118. On November 9, 1998, PCIA filed a petition for reconsideration of the Stay Order requesting that the Commission retract the additional requirement for deployment of systems pending the Commission's reconsideration of the CPNI Order. Several parties supported PCIA's petition and PCIA filed a Reply. We deny PCIA's petition, however, as we have granted infra, in part, the petitions for reconsideration with respect to the flagging and audit trail requirements. Thus, although new systems implemented prior to the expiration of the stay period will be required to comply with the new rules promulgated in this order, we believe the new rules are significantly less burdensome. We have considered the potential impact of our rules in this area on carriers' year 2000 (Y2K) remedial efforts and their plans to stabilize their networks over the Y2K conversion. We expect, however, that the increased flexibility, reduction in compliance burden and additional time for implementation that we grant here will greatly reduce the risk of such impact. Thus, and in light of the facts before us, we believe that our rules will have no significant detrimental effect on carriers' Y2K efforts. We conclude that it is in the public interest to extend the stay period an additional two months so as not to impede those efforts for carriers that chose to implement electronic safeguards under the modified rules. Accordingly, the Commission will not seek enforcement actions against carriers regarding compliance with sections 64.2009(a) and (c) of the Commission's rules until eight months after the release date of this order on reconsideration. 119. An industry coalition (Coalition) comprised of a combination of thirty-one industry representatives has proposed specific amendments to sections 64.2009(a), 64.2009(c), and 64.2009(e) of the Commission's rules (Coalition Proposal). After consideration of this proposal and other comments in the record, we adopt modifications to our flagging and audit trail requirements as set forth below. B. Notice 120. In the NPRM, we tentatively concluded that "all telecommunications carriers must establish effective safeguar