FCC Used Title II To Fine AT&T For SMS Cramming And The World Didn't End: Why Would It For Broadband?

from the questions-to-ponder dept

You may have heard the story a few weeks ago about how the FCC and FTC teamed up to fine AT&T $105 million for mobile cramming (allowing unauthorized mobile charges for premium -- costly -- SMS, of which AT&T kept 35% of all money made). As the FCC noted:

The Enforcement Bureau launched its investigation after receiving consumer complaints alleging that AT&T customers had been billed with months of unauthorized charges for third-party services that they did not request. In some cases, complaints alleged that AT&T Mobility refused to issue refunds or would only refund one or two months' worth of such charges, leaving consumers on the hook for the rest. Until January 2014, AT&T Mobility included charges for third-party services -- such as monthly subscriptions for ringtones, wallpaper, and text messages providing horoscopes, flirting tips, celebrity gossip, and other information -- on its customers' telephone bills. The charge for each of these types of subscriptions was typically $9.99 per month.

This was the largest fine the FCC has ever given out. Some, quite reasonably, pointed out that it took the FCC (and the FTC) quite a long time to catch up on this, as such practices had been called out for years and years.

However, there was a much more interesting element to this fine, as it relates to the current net neutrality "Title II" fight. Remember, the telcos (including AT&T) are pretty adamant that if broadband is classified under Title II it will be the death of all good things. It will be a huge regulatory burden and companies like AT&T are likely to cease all investment and such. Similarly, AT&T and others insist that there's enough competition in the market to prevent anti-consumer practices, and that Title II simply isn't necessary in such a "competitive" market.

So, um, what authority did the FCC use to fine AT&T this time? Well, buried in the official filing, we see that it was done under Section 201(b) of the Communications Act of 1934. You can see 47 USC 201 and read it for yourself, but it's mostly important to know that 47 USC 201 is Title II. In other words, despite an even more "competitive" mobile market than broadband, the FCC had to break out Title II regulations to protect consumers from a years-long scam in which AT&T profited massively, scamming millions from consumers.

And... notice that AT&T accepted the fine and isn't complaining about it. Nor is it challenging the use of the Title II authority, despite SMS being considered something of a service in "limbo" in which it hasn't been definitively classified under Title II or Title I.

And yet, the mobile world has not collapsed. AT&T and other mobile operators aren't screaming to the heavens about how this use of Title II will chill all investment, create massive problems and lead to the end of all that is beautiful and innovative, as they claim about broadband. Instead, they're basically admitting that they helped out with and profited from this scam for years, and that the FCC needed to make use of this authority to protect the consumers that AT&T did nothing to protect, despite knowing full well what was going on for many, many years.

So, from all this, we sense two things: (1) these big telcos can be nasty scammers, cheating people out of money even when there is competition and (2) Title II is not so horrible after all and can actually be quite helpful (eventually!) in getting the big telcos to eventually stop their scammy practices and pay up...

Filed Under: competition, cramming, fcc, ftc, net neutrality, regulation, scams, title ii
Companies: at&t