WASHINGTON-A key court battle with far-reaching implications for nationwide calling plans of top mobile-phone carriers kicked off in a federal appeals court in Atlanta, with a consumer group and Vermont regulators arguing the Federal Communications Commission exceeded its authority in pre-empting state regulation of line-item charges on wireless bills.
In the March decision at issue, the FCC extended truth-in-billing rules to mobile-phone carriers. However, the agency refused to ban regulatory recovery fees-as requested by the National Association of State Utility Consumer Advocates-so long as such charges are not misleading. The FCC also pre-empted state regulation of line items on wireless bills.
Carriers include such charges on bills to help defray the cost of federal mandates such as enhanced 911, local number portability and universal-service-fund contributions.
The legal challenges lodged by NASUCA and the Vermont Public Service Board in the 11th U.S. Circuit Court of Appeals calls into question the FCC’s interpretation of a 1993 law that has become a lightning rod for controversy during the past decade. The ’93 law pre-empted state regulation of rates and market entry of wireless operators, but reserved to states oversight of “other terms and conditions” of mobile-phone service.
In recent years, courts around the country have read differently the 1993 pre-emption clause-leading to decisions both favorable and unfavorable to the cellular industry.
NASUCA and the Vermont PSB, whose separate appeals were consolidated in the 11th Circuit, share the view that the FCC erred in pre-empting state jurisdiction over wireless line items. But the two entities otherwise have taken different legal approaches to the case.
“Consumers find it difficult to determine their total out-of-pocket costs for any particular carrier’s service, are misinformed by carriers’ advertising and marketing materials about carriers’ true rates for service, and are stymied in their efforts to accurately compare carriers’ rates since so many fees are tacked on to the bill,” NASUCA stated in its opening brief. “Telephone customers also have virtually no way of knowing whether their carrier’s regulatory fee bears any reasonable relationship to the actual regulatory costs the fee ostensibly covers.”
In a follow-up to the March decision, the FCC launched a rulemaking seeking public comment on tentative conclusions that nontax line items be located in a section of a wireless bill separate from government-imposed charges and that carriers disclose to consumers the full rate-including any nonmandated line items as well as an estimate of government-imposed surcharges-at the point of sale. The agency also initially determined that state truth-in-billing regulations inconsistent with federal guidelines are pre-empted.
Still, the FCC qualified its initial findings by saying future pre-emption would not limit the ability of states to enforce their own consumer protection laws.
The wireless industry, which is fighting various local and state taxes throughout the country, argues consumers have a right to know the regulatory costs of services they purchase. Wireless carriers do not want to fight 50 states over billing, battles that could undercut a fundamental and strategic feature of their business models: national calling plans.
The cellular industry has proposed a national framework for wireless billing based on its voluntary code of conduct for service. In addition, wireless lobbyists are pressing for greater pre-emption of states at the FCC and on Capitol Hill.
The Vermont PSB said the FCC went too far in construing “rates charged” to include the manner in which line items are presented in consumers’ bills.
While Vermont regulators disagree with how the FCC has applied truth-in-billing guidelines to wireless carriers, other state regulators have voiced support for the agency’s light-handed regulatory approach to the issue. RCR
