After nearly two decades (1) and several trips to the U.S. Court of Appeals for the District of Columbia Circuit ("D.C. Circuit Court"), (2) the Federal Communications Commission's wish to rid itself of the burden of processing and warehousing reams of long-distance domestic tariffs (3) became a reality on July 31, 2001. (4)
In a May 9, 2000 Public Notice (5) following the D.C. Circuit Court's decision upholding the FCC's mandatory detariffing order, (6) long-distance carriers were required to withdraw their paper tariffs for domestic long-distance mass market services from the Commission. (7) In the place of filed tariffs, long-distance carriers were required to post their "rates, terms and condition[s]" on their Internet Web sites or, if they did not maintain a Web site, to make this information available in one central location where the public could inspect them during regular business hours. (8) Similar requirements applied to carriers offering specialized customer arrangements, or "contract tariffs." (9) The deadline for posting contract tariffs on the Internet was also January 31, 2001. (10)
In what can be described as a paroxysm of overzealous consumerism, the FCC, in effect, announced its opinion that as a result of detariffing, carriers may no longer rely upon the Filed Tariff Doctrine (a.k.a. Filed Rate Doctrine). (11) The chief effect of this announcement, expressly encouraged by the FCC, is to open the carrier-customer relationship to the scrutiny of state authorities, like the State Attorneys General and state consumer-protection laws. In addition, legal challenges based upon the principles of contract law were also "endorsed" by the FCC. (12)
The consequences of such an environment are directly linked to the financial bottom line of long-distance carriers. Today it can cost a long-distance carrier approximately $300 to acquire a new customer (13) or to retain an existing customer. Without tariffs, it is certain that these costs will rise and even explode to $1,000 or more. A carrier's costs of complying with the strict liability standard of the anti-slamming, (14) anti-cramming, (15) and other consumer-protection rules (16) have been extremely high. Now that the Attorneys General of the states and other state consumer agencies are able to attack the sales and marketing practices of long-distance carriers under state consumer-protection laws, compliance and appeasement costs are likely to skyrocket. (17) This is even more troubling in the current regulatory environment in which State Attorneys General offices, utility commissions, and the FCC use a handful of customer complaints to extract costly settlements from carriers. The bottom line is that the incentives created by the enforcement of the slamming rules (to make headlines and political hay and gain revenues for state and federal coffers through this telecommunications version of the "speed trap") have never been greater and will only increase as a result of detariffing.
The bad news does not end there for long-distance carriers. Single plaintiff and class action civil suits for misrepresentation, fraud, breach of contract, and even unfair competition are all now certain to become a larger part of the regulatory fabric of telecommunications. While this view of the FCC's detariffing action can and will be disputed, and the argument will be made that consumers must be protected, it cannot be denied that the FCC and its state brethren have not paid the slightest attention to the other side of the story. That is, the costs that will be imposed on all consumers because of the desire to penalize carriers, without limits, for the allegations of a few consumers. This will be the real legacy of FCC-mandated detariffing.
Since detariffing has only been in effect for a short while, it is too early to gauge even the near term economic and operational impacts of the detariffing mandates and Internet posting requirements. …