Consumer Protection

• Pages: 399-441

399

CHAPTER VII

CONSUMER PROTECTION

A. Introduction

Antitrust and consumer protection laws share a common goal of

fostering consumer welfare and consumer choice, though they approach

the marketplace from different perspectives. The procompetitive

economic policies underlying antitrust laws promote consumer choice by

protecting competition overall, 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, deregulated

telecommunications marketplace evolved in a piecemeal fashion until the

enactment of the Telecommunications Act of 1996 (1996 Act).1 Before

the 1996 Act, separate judicial, administrative, and legislative actions at

both federal and state levels shaped the deregulatory process. During that

period, as the industry shifted from pervasive oversight to deregulation

intended to spur competition, the unfair and deceptive practices of some

market participants prompted new consumer safeguards.

This chapter identifies major consumer protection issues in the

deregulated telecommunications marketplace. Broadly considered,

consumer protection analysis could include most regulatory measures

affecting commerce, but this chapter will focus on efforts to curtail unfair

and deceptive practices that deprive or limit a consumer’s right and

ability to choose among products and services in the telecommunications

industry. Particular practices—some controversial—are described along

with the responses contemplated or implemented by federal and state

authorities.

1. Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56

(1996) (codified as amended at 47 U.S.C. § 151 et seq. [hereinafter 1996

Act].

400 Telecom Antitrust Handbook

B. Jurisdiction over Unfair and Coercive Practices in the

Deregulated Telecommunications Marketplace

The telecommunications industry’s transition to a deregulated,

competitive marketplace necessarily involved a restructuring of

consumer safeguards afforded in a previously regulated, monopolistic

market. Before deregulation, the principal oversight of consumer

protection issues fell to state public utility commissions, which had

jurisdiction over local telephone services. While the Federal

Communications Commission (FCC) retained jurisdiction over interstate

services, the FCC was not active on consumer protection issues during

much of this period.

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. These terms and conditions

typically were reviewed prior to the introduction of the service, when

tariff amendments were proposed by telecommunications carriers. 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.

Deregulation decreased barriers to entry, reduced legal restraints, and

opened the telecommunications marketplace to many new participants

and practices. Deregulation also resulted in uncertainty regarding

consumer rights, provider obligations, and the authority of government

agencies. When consumers encountered questionable or unscrupulous

practices in the marketplace, they filed complaints with the FCC and

other agencies. FCC statistics reflect that between October 2014 and

June 2017 the FCC received more than 850,000 consumer complaints

(approximately 147,000 concerned billing issues, more than 100,000

about “robocalls,“ and nearly 10,000 relating to “cramming” or

“slamming”). 2 Additionally, telephone and mobile services are

consistently in the top ten list of common consumer complaints at the

Federal Trade Commission, a sister agency that primarily focuses on

non-carriers. The FCC’s response to these and other practices are

discussed in the sections that follow.

2. Data, FED. COMMC’NS COMM’N, available at www.fcc.gov/data.

Consumer Protection 401

1.

Federal Response to Consumer Protection Issues in

Telecommunications Markets

a. FCC Consumer Protection Jurisdiction and Enforcement

Historically, most consumer telecommunications providers offered

intrastate local telephone services. Under the Communications Act,

intrastate services generally are not subject to FCC oversight and for

decades state agencies (such as public utility commissions) were the

primary regulators of consumer protection issues arising in connection

with telecommunications services. With the proliferation of wireless

telecommunications services, Voice over Internet Protocol (VoIP)

services, and Internet access services that blur the line between interstate

and intrastate communications, the FCC began taking a more active role

in consumer protection matters and pursuing a robust agenda, citing

numerous provisions in the 1996 Act—including Sections 201, 202, and

258—as the basis for its authority, both in regulatory and enforcement

actions. Recent history therefore reflects this more active FCC presence

in consumer protection matters.

The 1996 Act introduced numerous provisions through which the

FCC has asserted jurisdiction over consumer protection issues:

• Section 201 mandates that common carriers 3 provide their

common carrier services upon reasonable request, and that all

charges, practices, classifications, and regulations for such

services be just and reasonable;

• Section 202 provides that it is unlawful for any common carrier,

with respect to a common carrier service offering, to make any

unjust or unrea sonable discrimination in charges, practices,

classifications, regulations, facilities, or services, or to make or

give any undue or unreasonable preference or advantage to any

person or class of persons;

3. Though the term “common carrier” is often used to refer to

telecommunications providers generally, it in fact has a narrower

statutory definition as follows: “The term ‘co mmon carrier’ or ‘carrier’

means any person engaged as a common carrier for hire, in interstate or

foreign communication by wire or radio or interstate or foreign ra dio

transmission of energy, except where reference is made to common

carriers not subject to this chapter; but a person engaged in radio

broadcasting shall not, insofar as such person is so engaged, be deemed a

common carrier.” 47 U.S.C. §153.