WASHINGTON—A federal appeals court ruled Monday the Federal Communications Commission overreached when it said states could not prohibit wireless carriers from putting certain line items on their bills. Only Congress can overturn the court’s decision.
Wireless trade association CTIA bemoaned the ruling.
“Creating a mish-mash of inconsistent state-by-state wireless regulations will do nothing to benefit consumers and doesn’t make sense. Quite the contrary, this type of piecemeal regulation will dismantle the national business models that wireless companies have built to deliver consumers highly innovative products and services at lower prices,” said CTIA President Steve Largent.
The National Association of State Utility Consumer Advocates sought to have the FCC ban regulatory-recovery fees—charges levied by wireless carriers to defray the cost of state and/or federal mandates such as local number portability, enhanced 911 and universal service. NASUCA said the charges are deceptive because they come across to consumers as looking like mandated state and federal charges. Mobile-phone operators have argued regulatory-recovery fees help consumers see precisely what they are paying for.
In its 2005 decision, the FCC said rules either requiring or prohibiting line items on wireless bills amount to illegal rate regulation. However, in its Monday ruling, the U.S. Court of Appeals for the 11th Circuit said the agency did not have the authority to do this.
“The FCC exceeded its authority when it pre-empted the states from requiring or prohibiting the use of line items. The scope of federal authority to regulate ‘rate’ or ‘entry’ does not include the presentation of line items on cellular wireless bills. This billing practice is a matter of ‘other terms and conditions’ that Congress intended to be regulable by the states,” wrote Judge William Pryor, Jr.
Congress is already involved with the issue. Although pre-emption of wireless state regulation was left out of the telecommunications-reform bill passed by the House of Representatives, wireless pre-emption was included in the bill passed by the Senate Commerce Committee. The Senate bill, however, faces a significant hurdle since strong network-neutrality language was not included.
The 11th Circuit ruling could also impact other state-federal issues across the country.
Last year, Cingular Wireless L.L.C., Verizon Wireless, Sprint Nextel Corp. and T-Mobile USA Inc. sued Kentucky to challenge a new tax signed into law by Republican Gov. Ernie Fletcher. The law, which forbids telecom carriers from passing on to consumers a 1.3-percent gross receipts tax, was to have gone into effect Jan. 1. However, in December U.S. District Judge Karen Caldwell temporarily suspended the Kentucky lawsuit pending a ruling in the 11th Circuit’s truth-in-billing case. Mobile-phone carriers argue non-Kentucky cellular customers on national calling plans would have to absorb most of the cost of the state tax without gaining any benefit.
The FCC also is crafting a follow-up truth-in-billing order. The commission has tentatively concluded that inconsistent state regulation of truth-in-billing regulations should be pre-empted. At the same time, the FCC said future pre-emption would not limit the ability of states to enforce their own consumer-protection laws. The agency also tentatively concluded that non-tax line items must be located in a section of a wireless bill separate from government-imposed charges, and that carriers must disclose to consumers their full monthly rate, including any non-mandated line items, as well as an estimate of government-imposed surcharges.
