Chapter VII. Consumer Protection

• Pages: 345-389

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CHAPTER VII

CONSUMER PROTECTION

A. Introduction

Antitrust and consumer protection laws share a common goal of

fostering consumer choice, but they approach the marketplace from

different perspectives. The procompetitive economic policies underlying

antitrust laws promote consumer choice by protecting competition, not

individual competitors or consumers. In contrast, consumer protection

laws focus on the behavior of particular competitors and consumers and

promote consumer choice by prohibiting coercion and deception in the

marketplace.

The legal structure for a competitive telecommunications

marketplace evolved piecemeal until the enactment of the

Telecommunications Act of 1996.1 Before the 1996 Act, separate

judicial, administrative, and legislative actions at both federal and state

levels shaped the deregulatory process. As a consequence, consumer

safeguards largely developed in response to deregulatory changes that

were intended to promote competition but that had the unintended effect

of making possible the use of coercive and unfair practices against

consumers.

This chapter identifies major consumer protection issues in the

deregulatory process. Broadly considered, consumer protection analysis

could include most regulatory measures affecting commerce, but this

chapter will focus on efforts to curtail unfair and coercive practices that

deprive or limit a consumer’s right and ability to choose among products

and services. Particular practices will be described along with the

responses implemented by federal and state authorities and consumers.

Finally, the legacy of tariffs, the filed rate doctrine, and other residual

regulatory policies, and in particular their effect on remedies for coercive

and unfair practices, will also be discussed.

1. Pub. L. No. 104-104, 110 Stat. 56, codified at 47 U.S.C. § 151 et seq.

[hereinafter 1996 Act].

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B. Consumer Protection in the Telecommunications Marketplace

The telecommunications industry’s transition to a deregulated,

competitive marketplace necessarily involved a restructuring of

consumer safeguards afforded in this previously regulated, monopolistic

market. Before deregulation, federal and state administrative agencies

comprehensively oversaw telecommunications industry practices.

Consumer protection in the regulated telecommunications marketplace

was a function of several factors. First, economic rate review was

designed to make reasonably priced services available on a

nondiscriminatory basis. Second, service terms and conditions in filed

tariffs (performing the function of contracts in a competitive

marketplace) were required to be just and reasonable so as to preclude

coercive, unfair, and deceptive practices. Third, government regulatory

agencies used their comprehensive authority to address consumer

complaints of unsatisfactory service and repair problems, unfair

practices, deceptive advertising, and billing disputes.

The regulated telecommunications industry may have offered limited

consumer choices, but it also restricted the opportunity for coercion and

deception. Deregulation decreased barriers to entry, reduced legal

restraints, and opened the telecommunications marketplace to myriad

participants and practices. Deregulation also fostered uncertainty

regarding consumer rights, provider obligations and the authority of

government agencies. The recent convergence of traditional voice

telecommunications service with data, video, audio, and other services

providing digital content accessible by various devices through diverse

transmission networks contributes to this uncertainty.2

Following the breakup of AT&T in 1984, consumer complaints

about abusive and unfair practices increased dramatically.3 Since 2002,

2. Kevin Ryan, Communications Regulation—Ripe for Reform, 17

COMMLAW CONSPECTUS 771 (2009).

3. Deregulation of the telecommunications market led to a marked increase

in consumer complaints. See AT&T, Notice of Proposed Rulemaking, 6

F.C.C.R. 1689, ¶ 9 (1991). See also Debra Kay Thomas, The Consumer

Protection Myth in Long Distance Telephone Regulation: Remedies for

the “Caveat Dialer” Attitude, 27 TEX. TECH L. REV. 383, 397 (1996)

(weighing the benefits of deregulation for consumers against the potential

for increased unfair and deceptive business practices).

Consumer Protection 347

the first year available on the FCC website, the number of complaints

regarding traditional wireline services has decreased substantially.4

FCC Wireline Consumer Inquiries

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (3rd

Q)

Year

Number of Compla ints

Billing/Rates

Cramming

Slamming

Source: http://www.fcc.gov/encyclopedia/quarterly-reports-consumer-inquiries-

and-complaints.

However, telecommunications has remained in the top ten list of

common consumer complaints.5

1. Slamming

The right of consumers to choose among competing

telecommunications service providers is fundamental to a competitive

marketplace. Certain unfair practices, notably “slamming,” where a

subscriber’s provider is changed without authorization, deprive a

4. The number of complaints and inquiries regarding wireless services is

more difficult to interpret. While the number of complaints and inquiries

has varied greatly since 2002, complaint trends are difficult to discern

since the number of users of wireless devices has increased greatly.

5. Telecommunications-related complaints were in the top ten in 2010 as

reported by the Federal Trade Commission on Feb. 28, 2012. News

Release, FTC Releases List of Top Consumer Complaints in 2011;

Identity Theft Tops the List Again (Feb. 28, 2012), available at

http://www.ftc.gov/opa/2012/02/2011complaints.shtm.