HOUSE LAWMAKERS OFFERED A PREVIEW of the debate apt to escalate in coming months over efforts to write a wireless consumer protection bill, with the role of states expected to be highly controversial and critical to determining whether major stakeholders can find enough common ground to move legislation forward.
At a hearing on a draft bill penned by House telecom subcommittee Chairman Edward Markey (D-Mass.), Republicans and a prominent Democrat strongly suggested the draft measure did not go far enough to clarify federal pre-emption of states.
“I think there is plenty of room for improvement,” said Rep. Fred Upton (D-Mich.).
A 1993 law pre-empts states from regulating mobile-phone rates and market entry, but leaves to states oversight
of terms and conditions of wireless service. The reserve clause has been fertile ground for state intervention and litigation.
The Markey draft pre-empts states, but allows state attorneys general, public utility commissions and other state agencies to supplement Federal Communications Commission enforcement of national guidelines covering contract terms and charges, early termination fees, wireless service coverage maps, bill and service-quality monitoring. The draft also would ban state or local officials from blocking deployment of municipal broadband systems and direct the federal government to make more efficient use of its spectrum.
“I am mindful . that for federal pre-emption in this instance to be meaningful, it must represent not only a floor, but also true preemption of inconsistent state regulation,” stated House Commerce Committee Chairman John Dingell (D-Mich.). “The national framework must provide meaningful and enforceable consumer protections. At the same time, it must be reasonable so that industry continues to make the investments in wireless networks that have created thousands of jobs and can benefit consumers across the country.”
As such, Dingell voiced doubts about the Markey draft.
“Striking the right balance between protecting consumers and providing the industry with a thoughtful and manageable regulatory structure will not be easy, and I am not convinced that the discussion draft before us has struck the proper balance,” Dingell stated.
National policy goal
The mobile-phone industry’s top legislative priority is convincing Congress to embrace a national policy framework, one that expands federal pre-emption. Steve Largent, president of cellular industry association CTIA, said he was troubled that the draft gives multiple state agencies the ability to take action against mobile-phone carriers. He said the wireless industry prefers state enforcement residing with attorneys general. Largent also said several provisions of the Markey draft were troublesome, warning they could give rise to unintended consequences. The draft’s treatment of ETFs is an example, saying it “would effectively require the FCC to develop cost-based schedules for each combination of carrier charges, contract length and handset pricing, and would result in protracted legal wrangling over the appropriate methodology for determining the ‘cost’ of a device or subsidy.”
Chris Murray, senior counsel at Consumers Union, said lawmakers need to consider potential consequences of curtailing state authority before attempting to so. “If by imposing constraints and conditions on early termination penalties we are tacitly justifying them when they were otherwise illegal, this may be a net negative for consumers,” Murray stated. “Our fear is that this draft will become watered down and laden with provisions that actually harm consumers.”
FCC enforcement questioned
Murray also questioned whether the FCC – which he described as an overworked, under-performing agency – is up to the task of investigating new kinds of deceptive and fraudulent wireless practices. As such, he said lawmakers should consider eliminating the Federal Trade Commission’s common carrier exemption so the agency could police unfair and deceptive business practices in the wireless space.
“We don’t want to cut states out of the consumer protection business,” said Rep. Jane Harman (D-Calif.).
There is a division among states over whether federal preemption should be expanded as part of a new national wireless policy framework that would encompass consumer safeguards and a system of best practices for mobile-phone carriers.
The board of the National Association of Regulatory Utility Commissioners recently voted 16-9 to send back to the group’s telecom and consumer affairs committees a highly controversial national framework resolution that would further reduce state oversight of wireless operators. The resolution was approved by a 13-8 margin by the organization’s telecom committee. The matter could be addressed again by NARUC’S board in the summer.
Blocking and locking
CU’s Murray also recommended that the Markey draft address cellphone locking and application blocking problems.
The Markey bill does include a provision requiring wireless carrier to offer consumers a subsidy – free handsets without making accompanying service cost prohibitive.
“Allowing consumers to purchase unsubsidized handsets without a long-term wireless service plan, and at a fee no higher than subsidized wireless plans, would begin to knock down those obstacles and promote increased consumer freedom in the wireless market,” said Michael Calabrese, director of the Wireless Future Program at the New America Foundation.
Last year, Sens. Amy Klobuchar (D-Minn.) and Jay Rockefeller (D-W.Va.) introduced wireless consumer protection legislation. The measure pre-empts state law, but does not override state statutes that provide additional protections to cellphone subscribers.
CTIA, which has lobbied the past three years for a national regulatory framework, favors a bill sponsored by Sen. Mark Pryor (D-Ark.) that would accomplish the objective while eviscerating states’ ‘terms and conditions’ oversight of the wireless industry.
Earlier this year, the Supreme Court upheld a lower court ruling that struck down the FCC’s decision to pre-empt state regulation of line-item billing.
Markey’s hand could be strengthened if Democrats retain control of Congress and win the White House in the fall elections.
