[Federal Register: April 30, 2004 (Volume 69, Number 84)]
[Proposed Rules]
[Page 23701-23705]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30ap04-26]
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FEDERAL TRADE COMMISSION
16 CFR Part 310
RIN 3084-0098
Telemarketing Sales Rule Fees
AGENCY: Federal Trade Commission.
ACTION: Notice of proposed rulemaking; request for public comment.
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SUMMARY: The Federal Trade Commission (the ``Commission'' or ``FTC'')
is issuing a Notice of Proposed Rulemaking (``NPRM'') to amend the
Telemarketing Sales Rule (``TSR'') to revise the fees charged to
entities accessing the National Do Not Call Registry, and invites
written comments on the issues raised by the proposed changes.
DATES: Written comments must be submitted on or before June 1, 2004.
ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``TSR Fee Rule, Project No. P034305,'' to
facilitate the organization of comments. A comment filed in paper form
should include this reference both in the text and on the envelope, and
should be mailed or delivered to the following address: Federal Trade
Commission/Office of the Secretary, Room H-159 (Annex K), 600
Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing
confidential material must be filed in paper form. The FTC is
requesting that any comment filed in paper form be sent by courier or
overnight service, if possible, because U.S. postal mail in the
Washington area and at the Commission is subject to delay due to
heightened security precautions.
An electronic comment can be filed by (1) clicking on http://www.regulations.gov
; (2) selecting ``Federal Trade Commission'' at
``Search for Open Regulations;'' (3) locating the summary of this
Notice; (4) clicking on ``Submit a Comment on this Regulation;'' and
(5) completing the form. For a given electronic comment, any
information placed in the following fields--``Title,'' ``First Name,''
``Last Name,'' ``Organization Name,'' ``State,'' ``Comment,'' and
``Attachment''--will be publicly available on the FTC Web site. The
fields marked with an asterisk on the form are required in order for
the FTC to fully consider a particular comment. Commenters may choose
not to fill in one or more of those fields, but if they do so, their
comments may not be considered.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments with all
required fields completed, whether filed in paper or electronic form,
will be considered by the Commission, and will be available to the
public on the FTC Web site, to the extent practicable, at http://www.ftc.gov.
As a matter of discretion, the FTC makes every effort to remove home
contact information for individuals from the public comments it
receives before placing those comments on the FTC Web site. More
information, including routine uses permitted by the Privacy Act, may
be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm
.
FOR FURTHER INFORMATION CONTACT: David M. Torok, Staff Attorney, (202)
326-3075, Division of Marketing Practices, Bureau of Consumer
[[Page 23702]]
Protection, Federal Trade Commission, 600 Pennsylvania Avenue, NW.,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Background
On December 18, 2002, the Commission issued final amendments to the
Telemarketing Sales Rule, which, inter alia, established the National
Do Not Call Registry, permitting consumers to register, via either a
toll-free telephone number or the Internet, their preference not to
receive certain telemarketing calls. 68 FR 4580 (Jan. 29, 2003)
(``Amended TSR''). Under the Amended TSR, most telemarketers are
required to refrain from calling consumers who have placed their
numbers on the registry. 16 CFR 310.4(b)(1)(iii)(B). Telemarketers must
periodically access the registry to remove from their telemarketing
lists the telephone numbers of those consumers who have registered. 16
CFR 310.4(b)(3)(iv).\1\
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\1\ The Commission recently amended the TSR to require
telemarketers to access the national registry at least once every 31
days, effective January 1, 2005. See 69 FR 16368 (Mar. 29, 2004).
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Shortly after issuance of the Amended TSR, Congress passed The Do-
Not-Call Implementation Act, Public Law 108-10 (2003) (``the
Implementation Act''). The Implementation Act gave the Commission the
specific authority to ``promulgate regulations establishing fees
sufficient to implement and enforce the provisions relating to the `do-
not-call' registry of the [TSR]. * * * No amounts shall be collected as
fees pursuant to this section for such fiscal years except to the
extent provided in advance in appropriations Acts. Such amounts shall
be available * * * to offset the costs of activities and services
related to the implementation and enforcement of the [TSR], and other
activities resulting from such implementation and enforcement.'' Id. at
section 2.
On July 29, 2003, pursuant to the Implementation Act and the
Consolidated Appropriations Resolution of 2003, Public Law 108-7
(2003), the Commission issued a Final Rule further amending the TSR to
impose fees on entities accessing the National Do Not Call Registry. 68
FR 45134 (July 31, 2003) (``the Original Fee Rule''). Those fees were
based on the FTC's best estimate of the number of entities that would
be required to pay for access to the national registry, and the need to
raise $18.1 million in Fiscal Year 2003 to cover the costs associated
with the implementation and enforcement of the ``do-not-call''
provisions of the Amended TSR. The Commission determined that the fee
structure would be based on the number of different area codes of data
that an entity wished to access annually. The Original Fee Rule
established an annual fee of $25 for each area code of data requested
from the national registry, with the first five area codes of data
provided at no cost.\2\ The maximum annual fee was capped at $7,375 for
entities accessing 300 area codes of data or more. Id. at 45141.
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\2\ Once an entity requested access to area codes of data in the
national registry, it could access those area codes as often as it
deemed appropriate for one year (defined as its ``annual period'').
If, during the course of its annual period, an entity needed to
access data from more area codes than those initially selected, it
would be required to pay for access to those additional area codes.
For purposes of these additional payments, the annual period was
divided into two semi-annual periods of six months each. Obtaining
additional data from the registry during the first semi-annual, six
month period required a payment of $25 for each new area code.
During the second semi-annual, six month period, the charge for
obtaining data from each new area code requested during that six-
month period was $15. These payments for additional data would
provide the entity access to those additional area codes of data for
the remainder of its annual term.
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In the Consolidated Appropriations Act of 2004, Public Law 108-199
(Jan. 23, 2004) (``the 2004 Appropriations Act''), Congress permitted
the FTC to collect offsetting fees in Fiscal Year 2004 to implement and
enforce the TSR. Id. at Division B, Title V. Pursuant to the 2004
Appropriations Act and the Implementation Act, as well as the
Telemarketing Fraud and Abuse Prevention Act, 15 U.S.C. 6101-08 (``the
Telemarketing Act''), the FTC is issuing this NPRM to amend the fees
charged to entities accessing the National Do Not Call Registry.
II. Calculation of Proposed Revised Fees
In the Original Fee Rule, the Commission estimated that 10,000
entities would be required to pay for access to the National Do Not
Call Registry. The Commission based its estimate on the ``best
information available to the agency'' at that time. 68 FR at 45140. It
noted that this estimate was based on ``a number of significant
assumptions,'' about which the Commission had sought additional
information during the comment period. The Commission noted, however,
that it received virtually no comments providing information supporting
or challenging these assumptions. Id. As a result, the Commission
anticipated ``that these fees may need to be reexamined periodically
and adjusted, in future rulemaking proceedings, to reflect actual
experience with operating the registry.'' Id. at 45142.
Since the opening of the National Do Not Call Registry to entities
engaged in telemarketing on September 2, 2003, through early March,
2004, over 52,000 entities have accessed all or part of the information
in the registry. More than 45,500 of those entities have accessed five
or fewer area codes of data at no charge. Approximately 900 ``exempt''
entities have accessed the registry, also at no charge.\3\ As a result,
approximately 6,000 entities have paid for access to the registry, with
slightly over 1,100 entities paying for access to the entire registry.
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\3\ The Original Fee Rule stated that ``there shall be no charge
to any person engaging in or causing others to engage in outbound
telephone calls to consumers and who is accessing the National Do
Not Call Registry without being required to under this Rule, 47 CFR
64.1200, or any other federal law.'' 16 CFR 310.8(c). Such
``exempt'' organizations include entities that engage in outbound
telephone calls to consumers to induce charitable contributions, for
political fund raising, or to conduct surveys. They also include
entities engaged solely in calls to persons with whom they have an
established business relationship or from whom they have obtained
express written agreement to call, pursuant to 16 CFR
310.4(b)(1)(iii)(B)(i) or (ii), and who do not access the national
registry for any other purpose.
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As previously stated, the Commission can collect offsetting fees in
Fiscal Year 2004 to implement and enforce the Amended TSR.\4\ See the
2004 Appropriations Act, Division B, Title V. The Commission is
proposing a revised Fee Rule to raise $18 million of fees to offset
costs it expects to incur in this Fiscal Year for the following
purposes related to implementing and enforcing the ``do-not-call''
provisions of the Amended TSR. First, funds are required to operate the
national registry. This includes items such as handling consumer
registration and complaints, telemarketer access to the registry, state
access to the registry, and the management and operation of law
enforcement access to appropriate information. Second, funds are
required for law enforcement efforts, including identifying targets,
coordinating domestic and international initiatives, challenging
alleged violators, and consumer and business education efforts, which
are critical to securing compliance with the Amended TSR. Third, funds
are required to cover agency infrastructure and administration costs,
including information technology structural supports and distributed
mission overhead support costs for staff and
[[Page 23703]]
non-personnel expenses such as office space, utilities, and supplies.
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\4\ The 2004 Appropriations Act permitted the Commission to
collect offsetting fees of $23.1 million for those purposes. This
$23.1 million includes collections of $5.1 million from the Fiscal
Year 2003 Original Fee Rule that were actually collected in Fiscal
Year 2004 and $18 million to be raised from this year's Amended Fee
Rule.
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The Commission proposes to revise the fees charged for access to
the national registry based on the assumption that approximately the
same number of entities will access similar amounts of data from the
national registry during their next annual period.\5\ Based on that
assumption, and the continued allowance for free access to ``exempt''
organizations and for the first five area codes of data, the proposed
revised fee would be $45 per area code. The maximum amount that would
be charged to any single entity would be $12,375, which would be
charged to any entity accessing 280 area codes of data or more.\6\ The
fee charged to entities requesting access to additional area codes of
data during the second six months of their annual period would be
changed from $15 to $25.
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\5\ Telemarketers were first able to access the national
registry on September 2, 2003. As a result, the first year of
operation will not conclude until August 31, 2004. The Commission
realizes that a small number of additional entities may access the
national registry for the first time prior to September 1, 2004, and
should be considered in calculating the revised fees. However, the
Commission believes that most, if not virtually all, of those new
entrants will be smaller entities accessing five or fewer area
codes, and thus will have no effect on the calculation of the
revised fees. Should this assumption prove incorrect, the Commission
will adjust the assumption to reflect the actual number of entities
that have accessed the registry, and make the appropriate reductions
to the fees, at the time of issuance of the Final Rule.
\6\ The proposed fee structure would reduce the maximum number
of area codes for which an entity would be charged from 300 to 280.
The Commission is proposing this revision to more closely correlate
the charges for access to the registry with the number of active
area codes in use in the country today. There are approximately 317
available area codes in the nation, virtually all of which include
registered telephone numbers. However, approximately 35 of those
area codes are not currently in active service, but are reserved for
use in the future. (Telephone numbers from those area codes that
have been added to the national registry include numbers to be
activated in the future and numbers that are currently active for
billing or other purposes.) As a result, there are currently
approximately 280 active area codes, with additional area codes
scheduled to become active in the future.
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The Commission proposes to continue allowing all entities accessing
the national registry to obtain the first five area codes of data for
free.\7\ The Commission allowed such free access in the Original Fee
Rule ``to limit the burden placed on small businesses that only require
access to a small portion of the national registry.'' 68 FR at 45140.
The Commission noted that such a fee structure was consistent with the
mandate of the Regulatory Flexibility Act, 5 U.S.C. 601, which requires
that to the extent, if any, a rule is expected to have a significant
economic impact on a substantial number of small entities, agencies
should consider regulatory alternatives to minimize such impact. As
stated in the Original Fee Rule, ``the Commission continues to believe
that providing access to five area codes of data for free is an
appropriate compromise between the goals of equitably and adequately
funding the national registry, on one hand, and providing appropriate
relief for small businesses, on the other.'' Id. at 45141. In addition,
requiring over 45,000 entities to pay a small fee for access to five or
fewer area codes from the national registry would place a significant
burden on the registry, requiring the expenditure of even more
resources to handle properly that additional traffic. Nonetheless, the
Commission continues to seek comment on this issue.
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\7\ If all entities accessing the national registry were charged
for the first five area codes of data, the cost per area code would
be reduced to $32, while the maximum amount charged to access the
entire national registry would be $8960.
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The Commission also proposes to continue allowing ``exempt''
organizations, as discussed in footnote 3, above, to obtain free access
to the national registry. The Commission believes that any exempt
entity, voluntarily accessing the national registry to avoid calling
consumers who do not wish to receive telemarketing calls, should not be
charged for such access. Charging such entities access fees, when they
are under no legal obligation to comply with the ``do-not-call''
requirements of the TSR, may make them less likely to obtain access to
the national registry in the future, resulting in an increase in
unwanted calls to consumers. As with free access to five or fewer area
codes, the Commission seeks comment on this issue as well.
III. Invitation To Comment
All persons are hereby given notice of the opportunity to submit
written data, views, facts, and arguments addressing the issues raised
by this Notice. Written comments must be submitted on or before June 1,
2004. Comments should refer to ``TSR Fee Rule, Project No. P034305,''
to facilitate the organization of comments. A comment filed in paper
form should include this reference both in the text and on the
envelope, and should be mailed or delivered to the following address:
Federal Trade Commission/Office of the Secretary, Room H-159 (Annex K),
600 Pennsylvania Avenue, NW., Washington, DC 20580. If the comment
contains any material for which confidential treatment is requested, it
must be filed in paper (rather than electronic) form, and the first
page of the document must be clearly labeled ``Confidential.'' \8\ The
FTC is requesting that any comment filed in paper form be sent by
courier or overnight service, if possible, because U.S. postal mail in
the Washington area and at the Commission is subject to delay due to
heightened security precautions.
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\8\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be
accompanied by an explicit request for confidential treatment,
including the factual and legal basis for the request, and must
identify the specific portions of the comment to be withheld from
the public record. The request will be granted or denied by the
Commission's General Counsel, consistent with applicable law and the
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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An electronic comment can be filed by (1) clicking on http://www.regulations.gov
; (2) selecting ``Federal Trade Commission'' at
``Search for Open Regulations;'' (3) locating the summary of this
Notice; (4) clicking on ``Submit a Comment on this Regulation;'' and
(5) completing the form. For a given electronic comment, any
information placed in the following fields--``Title,'' ``First Name,''
``Last Name,'' ``Organization Name,'' ``State,'' ``Comment,'' and
``Attachment''--will be publicly available on the FTC Web site. The
fields marked with an asterisk on the form are required in order for
the FTC to fully consider a particular comment. Commenters may choose
not to fill in one or more of those fields, but if they do so, their
comments may not be considered.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments with all
required fields completed, whether filed in paper or electronic form,
will be considered by the Commission, and will be available to the
public on the FTC Web site, to the extent practicable, at http://www.ftc.gov.
As a matter of discretion, the FTC makes every effort to remove home
contact information for individuals from the public comments it
receives before placing those comments on the FTC Web site. More
information, including routine uses permitted by the Privacy Act, may
be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm
.
IV. Communications by Outside Parties to Commissioners or Their
Advisors
Written communications and summaries or transcripts of oral
communications respecting the merits of this proceeding from any
outside party to any Commissioner or Commissioner's advisor will be
placed
[[Page 23704]]
on the public record. See 16 CFR 1.26(b)(5).
V. Paperwork Reduction Act
The proposed revised fee provision does not create any new
recordkeeping, reporting, or third-party disclosure requirements.
However, the Commission now has data based on the operation of the
National Do Not Call Registry indicating that 52,000 entities will
access the registry each year. The Commission's staff has increased its
estimate of the total paperwork burden accordingly, and the Office of
Management and Budget (``OMB'') has adjusted the existing clearance,
OMB Control No. 3084-0097.
Any entity that accesses the National Do Not Call Registry,
regardless of whether it is paying for access, must submit the minimal
identifying information that the Commission deems necessary. The
proposed rule does not change the information to be collected from
these entities or the frequency of collection. The staff continues to
estimate, as it did in the Original Fee Rule NPRM, that it should take
no longer than two minutes for each entity to submit this basic
information, and that each entity would have to submit the information
annually.\9\ Because of the increased estimate of the number of
entities accessing the registry, this requirement will result in 1,733
burden hours (52,000 entities x 2 minutes per entity = 104,000 minutes,
or 1,733 hours). In addition, the staff continues to estimate that
possibly one-half of those entities may need, during the course of
their annual period, to submit their identifying information more than
once in order to obtain additional area codes of data. This would
result in an additional 867 burden hours (26,000 entities x 2 minutes
per entity = 52,000 minutes, or 867 hours). Thus, the staff estimates
that the revised fee provision will impose a total paperwork burden of
approximately 2,600 hours per year. This is an increase of 2,225 hours
from the previous estimate of 375 hours.
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\9\ 68 FR 16238, 16245 (April 3, 2003). As stated in the
Original Fee Rule NPRM, this estimate is likely to be conservative
for Paperwork Reduction Act purposes. The OMB regulation defining
``information'' generally excludes disclosures that require persons
to provide facts necessary simply to identify themselves, e.g., the
respondent, the respondent's address, and a description of the
information the respondent seeks in detail sufficient to facilitate
the request. See 5 CFR 1320.3(h)(1).
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The Commission's staff anticipates that clerical employees (or
other low-level administrative personnel) of affected entities will
fulfill the function of supplying company-identifying information to
the registry contractor. Assuming a clerical hourly wage of $10 per
hour, the cumulative annual labor cost to respondents to provide the
requisite information is $26,000 (2,600 hours x $10 per hour). This is
an increase of $22,250 from the previous estimate of $3,750.
VI. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 604(a), requires
an agency either to provide an Initial Regulatory Flexibility Analysis
(``IRFA'') with a proposed rule, or certify that the proposed rule will
not have a significant economic impact on a substantial number of small
entities. The FTC does not expect that the rule concerning revised fees
will have the threshold impact on small entities. As discussed in
section III, above, this NPRM specifically proposes charging no fee for
access to data included in the registry from one to five area codes. As
a result, the Commission anticipates that many small businesses will be
able to access the national registry without having to pay any annual
fee. Thus, it is unlikely that there will be a significant burden on
small businesses resulting from the adoption of the proposed revised
fees. Nonetheless, the Commission has determined that it is appropriate
to publish an IRFA in order to inquire into the impact of this proposed
rule on small entities. Therefore, the Commission has prepared the
following analysis.
A. Reasons for the Proposed Rule
As outlined in section II, above, the Commission is proposing to
amend the fees charged to entities accessing the national registry in
order to raise sufficient amounts to offset the current year costs to
implement and enforce the Amended TSR.
B. Statement of Objectives and Legal Basis
The objective of the current proposed rule is to collect sufficient
fees from entities that must access the National Do Not Call Registry.
The legal authority for this NPRM is the 2004 Appropriations Act, the
Implementation Act, and the Telemarketing Act.
C. Description of Small Entities To Which the Rule Will Apply
The Small Business Administration has determined that
``telemarketing bureaus'' with $6 million or less in annual receipts
qualify as small businesses. See 13 CFR 121.201. Similar standards,
i.e., $6 million or less in annual receipts, apply for many retail
businesses which may be ``sellers'' and subject to the proposed revised
fee provisions outlined in this NPRM. In addition, there may be other
types of businesses, other than retail establishments, that would be
``sellers'' subject to the proposed rule.
As described in section II, above, more than 45,500 entities have
accessed five or fewer area codes of data from the national registry at
no charge. While not all of these entities may qualify as small
businesses, and some small businesses may be required to purchase
access to more than five area codes of data, the Commission believes
that this is the best estimate of the number of small entities that
would be subject to the proposed revised fee rule. The Commission
invites comment on this issue, including information about the number
and type of small business entities that may be subject to the revised
fees.
D. Projected Reporting, Recordkeeping and Other Compliance Requirements
The information collection activities at issue in this NPRM consist
principally of the requirement that firms, regardless of size, that
access the national registry submit minimal identifying and payment
information, which is necessary for the agency to collect the required
fees. The cost impact of that requirement and the labor or professional
expertise required for compliance with that requirement are discussed
in section V, above.
As for compliance requirements, small and large entities subject to
the revised fee rule will pay the same fees to obtain access to the
National Do Not Call Registry in order to reconcile their calling lists
with the phone numbers maintained in the national registry. As noted
earlier, however, compliance costs for small entities are not
anticipated to have a significant impact on small entities, to the
extent the Commission believes that compliance costs for those entities
will be largely minimized by their ability to obtain data for up to
five area codes at no charge.
E. Duplication With Other Federal Rules
None.
F. Discussion of Significant Alternatives
The Commission recognizes that alternatives to the proposed revised
fee are possible. For example, instead of a fee based on the number of
area codes that a telemarketer accesses from the national registry,
access could be provided on the basis of a flat fee regardless of the
number of area codes accessed, or on a fee that does not permit free
access for one to five area codes. The Commission believes, however,
that those alternatives would likely impose greater costs on small
[[Page 23705]]
businesses, to the extent they are more likely to access fewer area
codes than larger entities. Accordingly, the Commission believes its
current proposal is likely to be the least burdensome for small
businesses, while achieving the goal of covering the necessary costs to
implement and enforce the Amended TSR.
Despite these conclusions, the Commission welcomes comment on any
significant alternatives that would further minimize the impact on
small entities, consistent with the objectives of the Telemarketing
Act, the 2004 Appropriations Act, and the Implementation Act.
List of Subjects in 16 CFR Part 310
Telemarketing, Trade practices.
Proposed Rule
Accordingly, for the reasons stated in the preamble, the Federal
Trade Commission proposes to amend part 310 of title 16 of the Code of
Federal Regulations as follows:
PART 310--TELEMARKETING SALES RULE
1. The authority citation for part 310 continues to read as
follows:
Authority: 15 U.S.C. 6101-6108.
2. Amend Sec. 310.8 by revising paragraphs (c) and (d) to read as
follows:
Sec. 310.8 Fee for access to do-not-call registry.
* * * * *
(c) The annual fee, which must be paid by any person prior to
obtaining access to the National Do Not Call Registry, is $45 per area
code of data accessed, up to a maximum of $12,375; provided, however,
that there shall be no charge for the first five area codes of data
accessed by any person, and provided further, that there shall be no
charge to any person engaging in or causing others to engage in
outbound telephone calls to consumers and who is accessing the National
Do Not Call Registry without being required under this Rule, 47 CFR
64.1200, or any other Federal law. Any person accessing the National Do
Not Call Registry may not participate in any arrangement to share the
cost of accessing the registry, including any arrangement with any
telemarketer or service provider to divide the costs to access the
registry among various clients of that telemarketer or service
provider.
(d) After a person, either directly or through another person, pays
the fees set forth in Sec. 310.8(c), the person will be provided a
unique account number which will allow that person to access the
registry data for the selected area codes at any time for twelve months
following the first day of the month in which the person paid the fee
(``the annual period''). To obtain access to additional area codes of
data during the first six months of the annual period, the person must
first pay $45 for each additional area code of data not initially
selected. To obtain access to additional area codes of data during the
second six months of the annual period, the person must first pay $25
for each additional area code of data not initially selected. The
payment of the additional fee will permit the person to access the
additional area codes of data for the remainder of the annual period.
* * * * *
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 04-9848 Filed 4-29-04; 8:45 am]
BILLING CODE 6750-01-P