SENS. BYRON DORGAN (D-N.D.) and Daniel Inouye (D-Hawaii) introduced a bill to give the Federal Trade Commission authority to crack down on fraudulent and anti-competitive behavior in the mobile phone industry and other telecom sectors. The bill adds a new twist to ongoing legislative efforts to create a national framework for consumer protections and policy in the wireless space.
“I commend Sen. Dorgan for his hard work in drafting this bill. His leadership has been central to this process,” said Inouye, chairman of the Senate Commerce Committee. “The bill contains significant improvements to strengthen the Federal Trade Commission’s ability to protect consumers and deter wrong-doers, particularly in the area of e-commerce fraud. The bill also contains provisions that would expedite commission processes, resulting in better consumer protection for all Americans.”
More importantly, for the wireless industry, the Dorgan-Inouye measure would repeal the common carrier exception in the FTC statute. Doing so would enable the FTC to halt unfair and deceptive practices by wireless carriers and other telecom service providers, especially in the areas of advertising, marketing and billing.
“There are too many problems in the telecommunications world that need to be addressed by the FTC – consumers should not be left unprotected,” Dorgan stated. “We also make sure that the state do-not-call laws are not preempted by federal regulations.”
The mobile industry is closely monitoring this latest development on Capitol Hill.
“We’re still reviewing the senators’ proposal, and we look forward to working with them as this legislation moves through Congress,” said John Taylor, a spokesman for Sprint Nextel Corp.
Verizon Wireless spokesman Jeffrey Nelson declined comment on the Dorgan-Inouye bill, explaining the No. 2 mobile phone carrier also is reviewing the new legislation.
“NARUC strongly supports the express reservation of state authority to provide greater protections to consumers via the state do-not-call laws in Section 12 [of the bill],” stated Brad Ramsay, general counsel of the National Association of Regulatory Utility Commissioners.” We look forward to working with the bill’s sponsors. We are still reviewing the bill. No decisions have been made, but past NARUC positions suggest our members may suggest similar reservations in other parts of this legislation.”
Common carrier exemption cut
FTC Chairman William Kovacic said repeal of the common carrier exemption – dating back to an era of highly regulated telecom monopolies – is long overdue. It is not first time the FTC has sought to add the telecom industry to its portfolio.
“Technological advances have blurred the traditional boundaries between telecommunications, entertainment and high technology,” stated Kovacic in prepared testimony for a Senate Commerce Committee hearing last week. “As the telecommunications and Internet industries continue to converge, the common carrier exemption is likely to frustrate the FTC’s ability to stop deceptive and unfair acts and unfair practices and unfair methods of competition with respect to interconnected communications, information, entertainment and payment services.”
“The FTC has extensive expertise with advertising, marketing, billing and collection, areas in which significant problems have emerged in the telecommunications industry. In addition, the FTC has powerful procedural and remedial tools that could be used effectively to address developing problems in the telecommunications industry if the FTC were authorized to reach them,” Kovacic added.
Consumer protection interplay
The Dorgan-Inouye bill could attract support from more lawmakers, given the Government Accountability Office’s finding that the Federal Communications Commission process for handling of consumer complaints is problematic.
It is unclear what the interplay might be between the Dorgan-Inouye bill and other consumer protection legislation that would impact the $120 billion mobile phone industry, one that does not want a new regime of federal wireless consumer safeguards. Indeed, the cellular industry backs a targeted bill backed by Sen. Mark Pryor (D-Ark.) that would overturn a provision in 1993 law reserving to states limited jurisdiction over mobile phone operators. The 1993 law bans state regulation of rates and market entry, but leaves to states oversight of “other terms and conditions” of wireless service.
The cellular industry opposes wireless consumer protection legislation championed by Sens. Amy Klobuchar (D-Minn.) and Jay Rockefeller (D-W.Va.) that would set federal guidelines for billing, early termination fees, mapping and service quality and contracts. The bill would not preempt state laws providing additional consumer protections to wireless subscribers. Klobuchar has been pressing AT&T Mobility, Sprint Nextel and T-Mobile USA Inc. to make good on their promises to pro-rate ETFs, a policy Verizon Wireless instituted last year.
House telecom subcommittee Chairman Edward Markey (DMass.) also has drafted wireless consumer protection legislation. The Markey draft pre-empts states, but allows state attorneys general, public utility commissions and other state agencies to supplement FCC enforcement of national guidelines covering contract terms and charges, early termination fees, wireless service coverage maps, bill and service-quality monitoring. For that reason in particular, the mobile phone industry is not rallying around the Markey legislative effort. The Massachusetts lawmaker’s draft legislation also bans state or local officials from blocking deployment of municipal broadband systems and directs the federal government to make more efficient use of its spectrum.
