Chapter VII. Consumer Protection

Pages345-389
345
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].
346 Telecom Antitrust Handbook
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.

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