FTC SEEKS JURISDICTION OVER CARRIERS, RAISING KEY QUESTIONS

The FTC Act exempts common carriers subject to the Communications Act from its prohibitions against unfair or deceptive practices and unfair methods of competition, the FTC said. The Commission unanimously recommended that the exemption be stricken, Comr. Thomas Leary told the House Commerce Subcommittee on Commerce, Trade & Consumer Protection Wed. morning. The telecom industry has changed dramatically since the law’s enactment, he said, as has the federal govt.’s regulatory role. Now, Leary said, the common carrier activities of telecom companies are regulated less by govt. fiat and more by competition, and those activities have expanded into other services such as the Internet. Moreover, he said, in the last century Congress has passed myriad laws creating sector-specific regulations, with the result that no one looks to a single govt. agency now to all address all problems in a particular sector.

The FTC isn’t out to invade the FCC’s territory and is trying to be as “unimperialistic” as possible, Leary said. However, he said, his agency is the one with extensive in- house expertise in ensuring that companies conduct their business fairly and honestly. Asked why the FTC was seeking the change only now, Leary said the agency had grown increasingly frustrated by its inability to deal with the problems.

Asked by Rep. Ferguson (R-N.J.) why the agency wasn’t also seeking to close exemptions from FTC oversight for other, less regulated industries such as airlines and banks, Leary said the telecom area was one in which the agency ran into frequent problems. The FTC can’t simply work jurisdictional issues out with the FCC, he said, because any deal by the 2 agencies won’t be binding on private parties. Leary said that with the line between what is and isn’t a common carrier blurring, more than fine-tuning of the current statute is needed.

Both Commerce Committee Chmn. Tauzin (R-La.) and Telecom Subcommittee Chmn. Upton (R-Mich.) questioned the need for doing away with the exemption. If there are instances where common carrier activities “are so intertwined with non-common carrier activities, I encourage the FTC and the FCC to work together and coordinate a joint enforcement response.” Dual regulation “is not the answer,” Tauzin said. And Upton said the FCC had shown it had the authority and ability to “police those bad apples in the common carrier barrel.” Duplicative regulations will confuse both consumers and the regulated community, Upton said.

But Commerce Committee ranking Democrat Dingell (Mich.) accused the FCC of becoming “so enamored with some of the industries it is assigned to regulate that it has become unable to act as the aggressive consumer advocate that is so needed at this time.” Therefore, Dingell said, he would “carefully consider” the FTC’s exemption removal request.

In a Senate hearing the same day, U.S. Telecom Assn. Vp- Gen. Counsel Lawrence Sarjeant strongly opposed giving the FTC concurrent jurisdiction over telecom common carriers, saying there had been “no compelling demonstration of a failure by the FCC” to ensure that consumers were protected from unreasonable or deceptive carrier practices. While the idea of leveling the playing field is “appealing,” Center for Democracy & Technology Assoc. Dir. Ari Schwartz said, rescinding the exemption could lead to duplicate regulation or consumer confusion. Before it moves forward, Schwartz said, the FTC should have a detailed plan of how it intended to deal with regulatory overlap.