A New Way to Compromise: An Analysis of the FCC, CTIA, and Consumers Union Bill Shock Compromise and Its Application to Cramming

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TABLE OF CONTENTS

  I. INTRODUCTION

 II. HISTORY OF COMMISSION PROTECTION OF WIRELESS
  CONSUMERS

  A. Pre-Genachowski Commission Regulatory Approaches

  1. Chairman Kennard
  2. Chairman Powell
  3. Chairman Martin

  B. Regulatory Actions and Philosophy of the Genachowski
  Commission

  1. Bill Shock
  2. Cramming
  3. Improving Consumer Education and Access to
     Information

III. ANALYSIS OF THE BILL SHOCK COMPROMISE

  A. The Commission's Authority to Impose the Rules Proposed in the
  Bill Shock NPRM is Questionable at Best

  B. The Bill Shock Compromise is Too Regulatory in Nature
  and Does Not Adequately Resolve the Consumer Harms that
  Exist

  1. The Wireless Industry Agreed to the Bill Shock Compromise
     Because It Was More Costly to Not Reach a Compromise
     and Not Because the Compromise Was Good Policy

  2. The Compromise is Unnecessarily Paternalistic,
     Inadequately Allocates the Costs of Compliance, and
     Will Ultimately Lead to Increased Costs for Wireless
     Consumers

  3. The Compromise is an Example of Regulating for
     Regulation's Sake that Does Not Adequately Address the
     Harms to Some Wireless Consumers

  C. Commission Action in Response to Bill Shock Should Have
  Focused on Deregulatory Solutions that Are More Narrowly
  Tailored to the Harms Found

  1. The Commission Should Have Taken Enforcement Action
     Against Unjust and Unreasonable Carrier Behavior Through
     the Rules and Mechanisms Already in Place

  2. The Commission Should Have Focused More on Adopting
     Policies Aimed at Working with Industry to Take Advantage
     of Usage Tracking Tools Already in Place and Increasing
     Consumer Access to Information

IV.  APPLICATION OF THE BILL SHOCK COMPROMISE TO CRAMMING

 V.  CONCLUSION

I. INTRODUCTION

This article will address the question of what amount of regulation is appropriate to protect consumers of commercial mobile radio services ("CMRS" or "wireless"). Specifically, it focuses on the recent compromise between the wireless industry, Consumers Union, and the Federal Communications Commission ("Commission" or "FCC"), which stemmed from the Commission's "bill shock" proceeding, and the viability of Commission-industry compromises as a future regulatory tool for protecting wireless consumers. Ultimately, the article concludes that the bill shock compromise is bad policy because it places substantial burdens on the wireless industry and fails to properly allocate the costs of compliance, which will lead to unnecessary costs for consumers. Instead, the Commission should have focused on enforcement against unjust and unreasonable carrier behavior for which the Commission already has authority. The Commission should have adopted policies that are aimed at working with industry to increase consumer choice and access to information, and narrowly tailored its solutions to concrete harms. While this paper concludes that in the case of bill shock, the comprise was bad policy, it nevertheless makes the argument that this style of Commission-industry compromise could be a useful regulatory mechanism for protecting consumers on issues such as cramming--as long as the outlined industry commitments are narrowly focused on the issue of informing and educating consumers.

In order to get a sense of past Commission actions, Part II of this paper first discusses the regulatory approaches and strategies relied on by prior Commissions to protect wireless telecommunications consumers. Second, it examines the regulatory philosophy of the Commission under Chairman Genachowski with regard to consumer protection. This discussion focuses primarily on the series of Commission actions regarding the issues of bill shock and cramming that culminated in a compromise where the wireless industry agreed to provide free and automatic alerts to consumers when their data, text and minute usage approaches and reaches capped levels. In Part III, the article analyzes whether the bill shock compromise is a wise policy mechanism for protecting wireless consumers from the harms of bill shock by examining whether these perceived consumer harms are actual harms, whether the costs of compliance were distributed efficiently, and whether the compromise will effectively remedy the consumer harms that do exist. …