FCC: EXPARTE COMMENTS

Before the

Federal Communications Commission

Washington, DC

CC Docket No. 95-155

In the Matter of 

Toll Free Service Access Code

EX PARTE COMMENTS OF VANITY INTERNATIONAL

Loren C. Stocker, Managing Partner of Vanity International, hereby submits ex parte comments in conjunction with the Notice of Proposed Rule Making released in this proceeding on October 5, 1995. With respect thereto, the following is stated:

On behalf of my smaller clients, myself, and the unsuspecting public I request that the FCC require the industry to IMMEDIATELY ABANDON the planned January 24, 1996 pre-reservation launch of the 888 exchange. In conjunction, the SMS should be reopened for "protection requests" until such time that all existing 800 owners have had due notice and a fair and equitable opportunity to apply for "protection" of the 888 version of their 800 number(s) with their existing carrier, or sufficient time to switch service to a carrier willing to do so on their behalf

This action is vital and in the best interest of the FCC, the industry, and the public. If the planned January 24 launch is allowed to go forward a great injustice will befall much of the 800 community; they will have unknowingly forfeited their exercise of "right off first refusal.” Further, the RespOrgs have collected “protection requests" in a way that clearly discriminates against small business. As of this moment, only the rich, the powerful, the well-connected, and the fortune few are pre-loading into the SMS and afforded "protection.” The rest of the 800 community is about to be blinded-sided. This situation is in clear violation of the public trust, and just the kind of injustice that would make headlines and prove to be embarrassing to the FCC, should the FCC fail to take decisive action. A summary of our findings follows.

Background

First, let me make it clear that I recognize that the FCC has not yet ruled on replication. If replication is stuck down, then "protection requests," "right of first refusal," and the like are mute issues. The purpose of this request is avoid irreparable damage in the meantime.

My company is uniquely positioned to view the scope of this situation. We are both consultants to large, Fortune 500 companies and to small companies that subscribe to 800 service, Without exception. our large clients were personally approached by RespOrg sales reps under heavy deadlines. They were asked to provide a list of existing numbers to be "protected" as well as requests for new 888 numbers. We know this for a fact; we helped them with their selections. On the other hand, the smaller companies subscribing to 800 services with eight of the largest RespOrgs (6 LDls and 2 RBOCS) were approached by only one of the LD’s and accidentally advised by another. When we reviewed correspondence from all eight RespOrgs since last November, there has been no apparent notification to the effect that 800 holders must act to "exercise their right of first refusal.”

Situation

There is widespread public confusion as to the purpose of the recent data collection by some RespOrg personnel. This effort was thought to be a "survey,” a "poll,” or as a way to "get a feel" of what the demand was for replication. Much of the data was not entered. Several RespOrgs elected to not take requests towards the end of the allotted period. Others choose not to participate at all. No problem. if this was just a "survey.” You can extrapolate (I suggest a factor of 3 or4). But, now I understand that this incomplete, unannounced, poorly collected data was, in fact, the real thing. It is being used as the sum total of "protection requests,” for right of first refusal. This is serious. This is wrong. This must be stopped.

Most companies -- predominately smaller 800 users -- were never asked for their input. Or, submitted requests but were never keyed into the SMS reservation system. Requests submitted to AT&T during the last 30 days, for example, are "collecting dust on some desk." These requests were not keyed in to the SMS and are not in "protected” status. 

Other RespOrgs, like Frontier, refused to even take requests stating that, "the FCC hasn't ruled yet." Others like MCI took data, but forwarded it to their customer relations group; the same group that decides if your company is big or important enough to get an MCI 800 number in the first place. It right of first refusal, if granted, is not a right of the privileged few, but of all 800 holders.

Supporting Facts/Findings

The FCC's Goal: "In light of our goal to make allocation of toll free numbers a fair and equitable process ... " (CC Docket No. 95-155). Any discrimination in the collection of “protection” data would fly in the face of this clearly stated objective. 

The Set-up: The December 15, 1995 Jetter from Michael Wade (DSMI) to Kathy Levitz (FCC) stated, "The initial round of protection requests was due December 14, 1995" (emphasis added). It also stated, "The next round of data input is scheduled for January 5 -- 12, 1996.”  Our understanding is that these numbers -- and only these numbers -- are coded as "not available" for the general 888 release and early reservation process to begin January 24, 1996. On January 16, 1996 I confirmed that is, indeed, the situation awaiting an FCC order to proceed. Concurrently, FCC has either been closed or snowbound and no action has been taken on replication. It is essential to recognize that a rescheduled launch date alone will not change this. 

The Deadline: The unsuspecting public expects that, given an affirmative FCC outcome, their right to replicate will be preserved. I could find no mention in the press that "protection requests" were fait accompli as of January 12, 1996. This deadline for "protection requests” was a backroom deal and published as an attachment to the "Comments of the SNAC/OBF.” This key deadline was unannounced to the public nor generally understood by those directly affected, i.e. the 800 community at large.

The Launch: I could find no mention in recent articles of the January 24 pre-reservation launch date. The public is wholly unaware that the 888 version of their 800 number may be assigned to someone else just days from now. This pre~ reservation mechanism would nullify their option to replicate, as the deadline for “protection requests” has passed. The January 24, 1996 launch date was also unannounced and is not generally known.

Who's First in Line?: The 888 request forms also contained requests for new, unreplicated 888 numbers. These requests may be filled by computer targeting during the first minutes of the January 24. 1996 launch (via the MGI) giving a competitive advantage to those who’s requests for new numbers are keyed in. This is especially troubling where you consider that one RespOrg may be targeting an 888 number for which AT&T (or other RespOrg) has an un-keyed request form. Subsequently, there will be no way to compel the successful RespOrg or holder to turn it over. A class action may ensue.

Due Notice: The commission has characterized telephone numbers as a public resource that is not the property of the carriers (NANP Order, CC Docket No. 92¬237, FCC 95-283). Yet, the RespOrgs were not required to participate (some did not) or even inform their subscribers of the consequences of their inaction. Is it not in the public interest to give 800 number "holders" due notice?

Right to Exercise: The question before the commission is "whether the current holders of 800 numbers should be permitted to exercise such a right of first refusal (888 replication, CC Docket No. 95~155).” There is no suggestion that the carriers have a right to decide this matter for them. Yet, by selectively collecting and submitting data RespOrgs may have sealed the faith of many of their subscribers. Is it not the right of the "holders,” to make this determination?

Personal Effort: After learning of the deadline, I made a personal effort to submit replication requests with 6 (5 LD's and 1 RBOC) of the 8 RespOrgs prior to the January 12 cut-off. Only one had made unilateral contact with us, and that was just days before the deadline. From that effort, I discovered the following: Requests submitted to AT&T -- and any since December -- are being logged in order of receipt, but not keyed into the SMS. Another LD RespOrg, Frontier, had no mechanism in place to take requests and stated that, “the FCC hasn't ruled yet." MCI. Sprint. CWC took requests, but it's not clear if they were going to be keyed in before the deadline.

The REOC had no mechanism and was of the understanding that the data gathering was just “for research.”

Case of 1-800-Tickets: Two weeks ago, unaware of the January 12, 1996 deadline, Mr. Richard Zorn, President of 800-Tickets, Inc., called AT&T to inquire about the current status of 888 replication. He was told explicitly, “We are not taking any requests. If we did, they would just be collecting dust on someone's desk.” On our advice. Mr. Zorn called AT&T once again during the week of January 8 and was further advised, "AT&T headquarters instructed us not to take any more forms, until further notice." Pressed further, however. the rep agreed to receive the form and subsequently forwarded it on to the 800 specialist in his Syracuse office.

On January 12. 1996 I personally confirmed that AT&T, indeed, had this policy in place. I further discovered that the receipt of these forms was "cut-off for a while, but now the forms were being logged in a pile by order of receipt; " a seemingly dead end. I specifically asked our AT&T contact if these requests were then being entered into the SMS database. He responded, "Not as far as I know." Further pressure by Mr. Zorn, incidentally, resulted in his 888 number being added to AT&T "protected" list as of today, January 18, 1996.

Discrimination by default

There should be no discrimination between large and small users. Period. All should be afforded due notice and equal access to "protection, II if granted. Yet, the facts suggest that RespOrgs made only limited effort to secure "protection requests" in light of the pending FCC rule on Docket No. 95-155; a classic application of the 80/20 rule driven by simple economics. As a result, their large subscribers were easily targeted and "got the word. " while others were either not solicited or not keyed-in upon submission (a la AT&T forms collection) when effort was suspended.

RespOrgs had incentives to get large users to sign their request forms, as these forms contained language that voided the replication requests should the user change RespOrgs. This language was necessary, of course, but had the clear benefit of locking in large customers for the duration of the ruling and launch. Economics supported this effort; it wasn't done just for the public good. This campaign began late last fall and was mostly completed by the December 14th deadline.

When it came to mid-size and smaller users, RespOrgs had less incentive to solicit requests and suspended most second-tier effort in December, pending FCC action. By default, smaller subscribers who failed to seek out "protection" during in the first wave -- the vast majority -- were neither notified to take action directly surveyed by any sales reps due to their lack of account revenue. These 800 holders are about to be blind-sided.

Conclusion

The situation as it stands is unconscionable. If granted. it is the "holders" right to replicate their 888 numbers -- not the RespOrgs, Yet. the RespOrgs have preempted the rights of small users by not taking action or by failing to advise them of the consequences of their inaction. When it comes to replication, it should make no difference whether a request is the first or last collected; “protection" means priority over any and all reservation requests.

The public is mistakenly under the notion that if the FCC aJIows replication, then they will have time ample to submit a request prior to the reservations launch. They are wholly unaware that a backroom deal may have rendered this assumption invalid. All afforded "protection" is fait accompli, and most of it as of December 14, 1995.

Further, the rich, the powerful, the well-connected, and the fortune few who's requests were pre-loading into the SMS may also be first to get their pre-reservations filled by computer targeting during the first minutes of the January 24. 1996 launch, or on a rescheduled launch date (a la the MCII555 technique). They would, thereby, become the assignees of888 vanity numbers for which replication requests may either be "collecting dust" or were never solicited in the first place. A class action may ensue.

It is, therefore, not sufficient to simply delay the launch; SMS must be reopened for "protection request" to give everyone a fair and equitable opportunity to participate. The public should be well advise of the timeline in advance.

Remedies and Recommendations

Suspend the January 24 launch at once. The FCC's extended furlough and winter weather is justification enough.

Make a ruling on Docket No 95-155 first. The RespOrgs should not have to expend further effort if this is all for naught.

Immediately reopen "protection requests" to all users to participate.

Prohibit any discrimination on the basis of "account revenue."

Require RespOrgs to inform all subscribers of deadline and the new launch date.

Require RespOrgs to inform all subscribers of their replication policy. If the RespOrgs are not going to key-in their request, then their subscribers should be so informed. Rather than compel RespOrgs to participate, this requirement allows market forces to drive the decision to participate or not.

Set deadlines to allow ample time for users to change to a participating carrier, if their present RespOrg is doing nothing.

Allow enough time between the “protection" deadline and the new launch date for concerned users to confirm their listing on the SMS. This will ensure accuracy and minimize fraud and abuse.

In summary, we contend that it is not the privilege of the RespOrgs to decide whether or not to seek "protection,” but, rather, the right of subscriber. Therefore, subscribers must be given due notice and adequate time to ensure their "protection requests" will be implemented by their existing RespOrgs; or adequate time to seek out a new carrier if the existing one is unwilling to do so. To rectify this situation, we ask that the FCC stop the deployment of 888 numbers at once and reopen submission of "protection requests."

WHEREFORE, it is respectfully requested that these comments be considered in this proceeding.

FCC: Stay Petition

Before the

Federal Communications Commission

Washington, D.C. 20554

REPORT NO. CC 97-17

CC DOCKET NO. 95-155

In the Matter of

RULES PROMOTING EFFICIENT USE FAIR DISTRIBUTION

OF TOLL-FREE NUMBERS

PETITION FOR STAY AND RECONSIDERATION

Loren C. Stocker, Managing Partner of Vanity International, hereby seeks an immediate stay and reconsideration of the referenced sections of the Report and Order dated April 4, 1997 on behalf our firm, our clients, and the general public.

Specifically, we request that the Commission vacate that portion of its decision that authorizes Carriers and/or Responsible Organizations (RespOrgs) to disconnect the toll-free numbers services of suspected "hoarders" without the benefit of notice, hearing or due process. Second, we request that the Commission vacate that portion of its rulemaking that creates a "rebuttable presumption” that any toll-free subscriber with "more than one toll-free number" is presumed to be illegally "hoarding” toll-free numbers. Third, we request that the Commission vacate that portion of its rulemaking that discriminates against toll-free subscribers in the exercise of their rights under the Telecommunications Act of 1996 as "telecommunications end-users,” and who are prescribed by Congress to have the right to "retain their telecommunications numbers" with full and unfettered "number portability."

Our company is uniquely positioned to view the scope of this situation as we consult both large, Fortune 500, companies and smaIl companies that subscribe to 800 service. Recently, we launched 800-Softline^tm and Soflline^sm Studios which are dedicated to the deployment and development of multi-channel commerce. The Softline^tm enterprise is basically an incubator for baby businesses aspiring to become the next 800-Flowers, each employing branded toll-free numbers, Internet domain addresses, and interactive services. I wish to focus my comments principally on the "Hoarding and Brokering" ruling which I find most anti-competitive and contrary to the public interest, if not outright unlawful and unconstitutional.

DEFECTIVE INDICATOR/PROCEDURE

It seems abundantly clear that the Common Carrier Bureau has overstepped its role as public servant and lost sight of its stated goal ''to make allocation of toll-free numbers a fair and equitable process." Perhaps someone mixed up the acronym; it’s FCC, not FBI.

My understanding is that the FCC is chartered to inquire into the affairs of regulated telecommunications suppliers, but not the private affairs of citizens and businesses-- especially without probable cause. This "rebuttable presumption" based on "multiple toll-free numbers" suggests unconscionable power to suspend a toll-free subscription and associated intellectual properly without due process. In effect, anyone with two or more numbers is considered guilty until proven otherwise.

The simple use of multiple toll-free numbers is a defective indicator of hoarding or brokering. In fact, the use of multiple toll-free numbers is an everyday business practice. Virtually every savvy advertiser in America tracks their media performance using unique toll-free numbers for each medium. Frequent advertisers use hundreds if not thousands of toll-free numbers for this purpose - all terminating to a "single toll-free subscriber." The use of multiple toll-free numbers is the status quo in American media.

Essentially, the FCC has no business dictating the number of toll-free numbers a business can use any more than the United States Post Service (USPS) should involve themselves in prescribing how many addresses a business can use. If the Commission "finds that the incentive already exists" for service providers to minimize the use of toll-free numbers (i.e. the $0.70 monthly fee), then let economics dictate this business decision as well.

ABUSE OF POWER

I fear the Commission has lost sight how such power in the hands of Carriers and/or RespOrgs will be abused by selective enforcement. Recent experience has shown that Carriers and/or RespOrgs will unfairly apply such rules as they did when they selectively invited participation in the 888 set-aside (See ExParte Comments o/Vanity International, January 19, 1996, and Emergency Motion/or Stay, February 29, 1996). The Commission can be certain that no Carrier and/or RespOrg will ever question the use of thousands of toll-free numbers by their large, Fortune 500 customers. This hostile and anticompetitive ruling will only be harmful to the very start-up businesses Congress is hoping to spawn.

The fact is that Carriers and/or RespOrgs would like the power to seize toll-free numbers from smaller clients and give them to their most favorite customers. Combined with "snap back" privileges, Carriers and/or RespOrgs would be back in the business of power brokering as they were before portability. The FCC should both stay subject ruling 52.107 and uphold 52.103d that requires Carriers and/or RespOrgs to drop disconnected numbers into the general pool for "first·come, first-service" assignment. Anything less would make the FCC party to this transparent campaign to engage in the redistribution of wealth.

The prevailing big business attitude is clearly reflected in the comments of TicketMaster (a.k.a Bass Tickets, Inc.) who sought to acquire a toll-free number from another subscriber, but was unwilling to buyout their interests. You will note that it was TicketMaster who "inquired about the availability of the number,” not the other way around (see "Comments of Bass Tickets" Inc. "). Subsequently" TicketMaster appealed to the Commission to make toll-free numbers prohibitively expensive to all but a select few.

Those businesses and individuals who had the foresight to secure excellent toll-free numbers, either vanity or numeric, have every right to use and develop those numbers as those who had the foresight to homestead on oceanfront property. Ethically~ how can a Commission that is unwilling to interfere with even the 800 numbers used by school children and others with pagers (i.e. without PIN codes), seize numbers from legitimate entrepreneurs who have demonstrated no intent to hoard or broker? It's too bad numbers are in short supply, but the contract with public was on a "first-come, first-serve" and assignments cannot now be revoked. Furthermore, the Commission is acutely aware that is was the Carriers and/or RespOrgs who "ran the bank during the final weeks of unrestricted 800 number access, not subscribers.

ABUSE OF PRIVILEGE

I do agree, support, and welcome the FCC’s authority to step in where subscribers are abusing the privilege of their toll-free subscription; specifically, subscribing to toll-free numbers with no intent but to sell. This behavior is an obvious obstruction to the 6'fair and equitable allocation of toll-free numbers.

A toll-free subscription, in my view, is analogous to homesteading where there was one cardinal rule: to gain ownership you had to live (i.e., use) on the property. Speculators could not lay a claim to land and immediately sell it off as real estate, having never set foot on the soil. The homesteading rule protected the public interest and ensured that land was freely available to those who had a bona fide intent to use the property. Similarly, toll-free numbers have been, and should remain, available on a "first-come, first-serve,' non-discriminatory basis. The rule for toll-free numbers should be just as rational; you want it, you got it - just use it as your own.

Abuse should be investigated only where there is probable cause that a number is being held only for the purposes of sale as evidenced by a verbal or written solicitation of sale of a toll-free number alone without any bona fide program, service, or enterprise. The plain meaning of this proposed language is that the subscriber must clearly demonstrate the intent to sell a toll-free number and that any compensation suggested must be solely for the release of the toll-free number; not to reprint business materials. alert a client base, acquire intellectual properties in any form (i.e. business plans~ trademarks, or client list), or acquire real assets.

If an inquiry is indicated by clear, compelling, and objective evidence. the 800 subscription should only be placed on-hold pending outcome if the number is inactivate to begin with. Under no circumstance should live 800 service be suspended or a number assignment revoked without due process.

Great caution should be exercised so that alleged offenders are not only given due process, but not victimized by the regulation.- In the attempted acquisition by TicketMaster (Comments of Bass Tickets, Inc.), for example, no action is indicated as the buyer initiated contact and solicited the release. Therefore, any evidence brought before the Commission should be dismissed, as the toll-free subscriber demonstrated no intent to sell prior to Ticketmaster's (a.k.a. Bass Tickets) contact. Buyers should not have standing to complain about transactions that they initiate. This stipulation prevents disgruntled buyers from appealing to the FCC each time a negotiation fails.

THE CONTINUING FICTION' OF A PUBLIC RESOURCE

Further, whenever a number is part of a program, service, or enterprise then the subscription can no longer be assumed a public good or resource. It is pure fantasy that a $250 million company like 800-Flowers is built upon a "public resource" without foundation and subject to the prevailing whims of the Commission. The full scope of ownership is clearly outside the authority of the Commission alone, as the issues involved are not purely telecommunication.

The truth is that when Jim McCann (Founder and President 800-Flowers) pays his phone bill, he pays for the subscription of the numeric 800-356-9377 not what it spells (i.e., 800-Flowers). Further, he has a reasonable expectation that the subscription win continue indefinitely. Even if Mr. McCann fails to make payment, he has up to four months to recover the subscription. The simple fact is that the intellectual property "800-Flowers" was created and overlaid upon a lifetime subscription; it was neither issued by the Carrier and/or RespOrg or part of the toll-free subscription. The same fundamentals apply to branded programs like 800-Collect and, in their most basic form, to a client list developed from the simple use of toIl-free numbers in commerce.

It should be clear to all that intellectual property is not a public resource, but neither is the control of a lifetime subscription; The Telecommunications Act of 1996 ensures that 800-Flowers has the right to "retain their telecommunications numbers” with full and unfettered "number portability. " What then supports the legal fiction that assigned numbers are a "public resource?"

In my view only unassigned toll-free numbers are a public resource - just as

Government land was unquestionably a public resource prior to homesteading. In stark contrast, companies, programs, and services like 800-Flowers, 800-Collect, and others can be sold and the subscription reassigned without any lawful interference by the Commission, Carriers and/or RespOrgs. The Commission has only a fictional standing in the matter and could be enjoined by the courts to prevent interference.

Rather, it is the system of telecommunications that remains and must always be nurtured and protected as public resource, not assigned addresses. For those readers still in denial, consider the folly of the USPS attempting foreclosure proceedings under the theory that a specific mailing address is a ''public resource" and must be reclaimed. If the Commission is to ensure that the "allocation of toll-free numbers [remain] a fair and equitable process,” then it must ensure that all companies and programs are afforded equal protection-- even those in their infancy!

ADEQUACY OF USE

Once a toll-free number is assigned, the Commission should not involve itself in the adequacy of use, i.e.,"the amount of calling of a particular number." This discriminatory assessment would be analogous to the USPS engaging in "red lining" or offering mail delivery only where the volume deems it to be profitable. The courts, too, decline to rule on the adequacy of compensation where a contract is otherwise valid. Further, the Commission ruled that a $0.70 monthly fee is incentive enough to use numbers wisely (i.e., "incentives already exist for using PIN"); how then can the Commission establish a double standard requiring targeted subscribers to justify the volume of use - or share proprietary business plans -- with an agency that has no authority to ask?

The 888 AUCTION FOLLY AND BEYOND

Finally, it should be abundantly clear that the proposed auction of confusingly similar 888 vanity numbers will be immediately enjoined and ultimately disallowed by the courts. The Commission has one thing absolutely correct: toll-free numbers have no inherent value. Rather, it the intellectual property overlaid by the 800 holders that is reportedly worth $700 million. An auction of these proprietary rights would be unconscionable (see 888¬Get-Real attached). The Commission would be wise to educate Congress and save everyone from this expensive, protracted litigation. Subsequently, the entire pool of 888 numbers should be released on the "first refusal" basis promised - without charge.

It should come as no surprise that public confusion between 800 and 888 will endure for generations, as 800 numbers have become synonymous with toll-free. Far more troubling is the confusion that will ensue when 877 and other toll-free numbers begin to look like local area codes. Just imagine the backlash from residential customers who field misdirected calls at all hours of the night in the 847, 807, and, perhaps, 887 area codes!

The better solution would be to abandon the doomed policy adopted by the "industry" and to accelerate the release of portable 500 numbers and, perhaps 700 numbers. The Commission should then seek comment on the creation of vanity SAC's (see Comments and Reply Comments of Vanity International) or a purely numeric solution like express prompting; an optional set of single-digit prompts entered before (express) or after (voice prompt) call completion. The express prompting solution would make each toll-free number -- and each local number for that matter - ten times more useful without damaging existing intellectual overlays.

The primary advantage of express prompting over a mandated eight-digit format is that the ten new addresses could be used or reassigned only by the existing subscriber. Many companies would then elect to release multiple numbers once their primary numbers serve a variety of locations and/or applications. Alternately, subscribers like 800-Flowers can op out of the feature and stay with the seven-digit call format that spells their name. From the consumer perspective, the transition is painless; dialing the traditional seven digits will -- at worst -- be intercepted by a voice prompt to guide them through any additional choices. From a business perspective, each number is ten times more powerful. Problem solved.

Recognizing that any change in the system will be time consuming and expensive, the Commission would be wise to seek a permanent solution that is both more desirable and less confusing than the existing quagmire.

CONCLUSION AND RECOMMENDATION

The Commission would best serve the public interest by maintaining a regulatory environment where the next 800-Flowers will be nurtured and protected from big business interests. In my-view, the Commission's role is to adopt policies that encourage toll-free business development as it has' done in radio licensing and HDTV. The present language in the Report and Order will only serve to deter investment and stifle business development and should, therefore, be immediately stayed until a more rational and equitable approach is employed.

Respectfully Submitted,

Loren C. Stocker, P.E. Managing Partner

Vanity Intemational

Chicago, IL 60614

PS: Please give this petition full force and effect of those received during the 30-day period We were advised thai the Memorial holiday extended the due date until today.