CARRIERS SAY FCC SHOULD REJECT TRUTH-IN-BILL ARGUMENTS

In a March filing, NASUCA argued that 7 IXCs and 9 wireless carriers were wrongly labeling discretionary line item surcharges using official sounding names such as “carrier cost recovery fees” and “regulatory assessment fees” even though they had never been approved by regulators. NASUCA urged the FCC to investigate and prohibit the charges.

Industry sources said that while the FCC asked for comments on the NASUCA petition there are few signs the FCC will mandate that carriers provide more specificity on the nature of the line charges. “I don’t whether it has legs,” said a top wireless lobbyist. The states said they hoped the FCC was listening.

NARUC expressed strong support in a resolution passed this week at its summer meetings for the principles advanced in the NASUCA petition and asked the FCC to investigate the billing practices of the carriers with regard to such surcharges. NARUC filed the petition in the docket.

The Cal. Public Utility Commission also expressed strong support for the NASUCA petition. “The CPUC recognizes not only the opportunity for carrier abuse but also a history of actual abuse that, left uncorrected, has the potential to distort competition by forcing carriers to match the abusive practices of other carriers or risk being disadvantaged in the marketplace,” the commission said.

The Attorney Gen. of Mass. said FCC should address NASUCA’s complaints. “Currently, the Commission does not regulate these line item surcharges and consumers must rely solely on existing market forces to keep these fees in check,” the AG said. “Market pressure alone, however, is not sufficient to ensure that consumers are not deceived or to ensure that consumers can make accurate price comparisons.”

Tex. agreed with Mass.: “Telecommunications carriers’ usage of line-item billing charges is also misleading and deceptive in its application and bears no demonstrable and accurate relationship to the regulatory costs they purport to recover.”

Among wireless carriers, CTIA said NASUCA was asking the FCC to take a “drastic” step that could have unintended consequences. “Not only would Commission action in this respect serve to limit the amount of information available to consumers in determining which carrier to choose, it would hamstring carriers’ attempts to provide consumers with national and regional calling plans and would ultimately impede the operation of a fully functional, competitive marketplace,” the association said.

Verizon Wireless said the remedy NASUCA was pursuing was beyond what the FCC can order. “NASUCA does not seek clarification of existing law, but rather seeks to change that law. That request is inappropriate as a petition for declaratory ruling,” the carrier said. “NASUCA’s petition is in effect either an untimely petition for reconsideration or a petition for rulemaking. NASUCA thus cannot be granted the request it seeks.”

AT&T Wireless charged that the changes NASUCA is seeking would violate the Communications Act. “Congress has chosen to take a hands-off approach to wireless regulation and it has expressly preempted states from interfering with wireless rate or entry decisions unless they specifically demonstrate a need for re-regulation,” AT&T said. “NASUCA’s petition amounts to a request for the Commission to grant all states wireless rate regulation authority.” AT&T also accused NASUCA of seeking to limit information, saying the group “would apparently prefer to keep consumers in the dark.”

Leap Wireless also found the changes NASUCA requested unnecessary and burdensome. “By asking the government to unnecessarily regulate wireless carrier rates, NASUCA’s proposal ignores the FCC’s carefully considered conclusions that such regulation would be unnecessary and counterproductive in this sector of telecommunications,” Leap said.

Bells, IXCs Say Petition Fails Procedurally

Big long distance carriers -- AT&T, MCI and Sprint -- and the Bells opposed the NASUCA petition, saying it should be denied as a matter of law and public policy. They said NASUCA was asking the Commission not to clarify but to change the existing rules, which they said would require submitting a petition for rulemaking.

MCI said the NASUCA’s request was “misguided,” because the Commission “should not promulgate a rule dictating to all carriers the way they should charge their customers for service. Doing so would run counter to more than 2 decades of Commission precedent, is unwarranted in today’s competitive marketplace given that NASUCA has made no showing of market failure, and would raise First Amendment concerns.” AT&T said the petition was a “disingenuous attempt to preclude carriers from assessing any line-items in their bills to end users.” It said both the TIB Order and the Contribution Order stated carriers could use line-items in their customer bills, subject to the disclosure and other requirements prescribed in those rulemakings.

Some agreed the rule sought by NASUCA -- to ban outright any line item charges unless the recovery of those charges is expressly mandated by a regulating agency -- would raise significant First Amendment concerns. Verizon said line item charges and their descriptions were “constitutionally protected speech as they convey information reflecting government regulations and policies, and the costs to consumers of those regulations and policies. The ability of carriers to convey such information thus lies at the heart of our democratic system of government.”

Many agreed NASUCA’s petition was based on unsupported assumptions and incomplete analysis, and failed to provide any evidence supporting its allegations. NTCA said NASUCA’s approach for solving the problem was “impractical and fails to consider technological advances and the needs of consumers.” It said “rather than adopting new rules and forcing all carriers to overhaul their billing systems as requested by NASUCA, the Commission should investigate substantiated complaints and punish the wrongdoers.”

USTA agreed that enforcement of Commission rules was required. It said the problem prompting NASUCA’s request was that “certain carriers are not complying with the Commission’s binding principles.” It said the solution was “not to impose the new rules that NASUCA requests, but to address carrier non-compliance on a carrier-specific basis for violation of section 201(b) of the [Telecom] Act.”

Sprint said if granted, NASUCA’s declaratory ruling would require that carriers recover regulatory costs through per-minute charges. It said that would deprive customers of information regarding the costs of regulatory programs. “It is NASUCA’s proposal, not current carrier practices, which would be misleading and deceptive,” Sprint said. Verizon said NASUCA’s petition would “limit the ability of carriers to truthfully identify the separate nature of consumer charges.” BellSouth said “confusing bills cannot be corrected by yet more regulation.” It said competition was “the great leveler and will always produce better results than regulation… If consumers want bill formats different than what they are receiving today, the market will produce them.”

AT&T and Sprint asked the Commission to reject NASUCA’s allegations that their charges were misleading and unsupported. Sprint said it disagreed with NASUCA’s “fundamental premise that consumers lack the intelligence or willingness to review billing information carriers provide in their stores, on their websites or in their advertising.” It said while serving over 26 million customers, it had “seen no evidence that line item surcharges have caused customer confusion or prevented consumers from making rational and informed choices.” AT&T said its billing of a 99 cents regulatory assessment fee -- to recover costs associated with interstate access charges, property taxes, regulatory proceedings and regulatory compliance -- had “at all times been in strict compliance” with the requirements of the TIB Order and the Commission’s rules.

Consumer groups strongly supported the request. Consumers Union said granting the petition would benefit consumers and increase competition in the wireless and wireline markets by: (1) “Revealing the true costs of telecommunications services to consumers by including costs in the per-minute or standard monthly price.” (2) “Allowing consumers to accurately compare prices by including add-on fees and surcharges in the advertised monthly cost of the service.” (3) “Prohibiting misleading labels that make these fees appear to be government imposed or mandatory.” (4) “Removing the incentive and opportunity to pad these fees and surcharges by including them in the advertised competitive price of the service rather than as a separate line item on the bill.”

Consumers Union said “deregulation has negatively affected consumers on many levels.” It said phone companies shouldn’t be allowed to “play fast and loose with so-called ‘regulatory compliance’ surcharges. While line item clutter purports to reveal all charges to consumers, it in fact results in effectively hiding the true cost of service.” Admitting that consumers’ billing complaints have decreased since 1999, when the FCC released its truth-in-billing rules, National Consumers League (NCL) said “telephone bills are still confusing because of the proliferation of line item charges cited in the NASUCA petition.” It said the FCC should “monitor and ensure that [line item] charges are commensurate with the actual costs involved” and “set standard descriptions for FCC-authorized line item charges.”