This is a positive outcome, all things considered. Wireless has thrived in a light-touch regulatory environment established in the 1990s. New "bill shock" regulation, however, risked saddling wireless services with unnecessary regulatory controls and—more importantly—would have provided a precedent for the FCC to regulate other facets of wireless service. To the extent wireless carriers can keep wireless free from new and unnecessary regulatory controls by placating the FCC through industry-wide self-policing, so much the better. Marketplace freedom is the environment most conducive to continued wireless investment, innovation, and competition.
The "Wireless Consumer Usage Notification Guidelines" constitute an industry-wide, voluntary plan for carriers to provide a slate of automatic overage alerts to wireless consumers who near and exceed their monthly plans' allowance for voice, video, or data services. The Guidelines will be incorporated into CTIA's "Consumer Code for Wireless Service" that provides disclosures and practices for wireless service to consumers. Implementation of the Guidelines by wireless carriers will take place between now and April 2013.
Most wireless carriers already provide a set of optional alert tools that consumers can use to monitor and receive updates regarding their monthly usage levels. So the Guidelines will result in a supplemental and more standardized set of opt-out alerts.
On their own terms, voluntarily-adopted industry standards regarding consumer overage alert messaging are a reasonable and commendable thing. However, "voluntary" takes on a qualified meaning when industry self-policing takes place in the shadow of looming agency rulemaking. In this instance, the standards adopted by the wireless industry are made in direct response to the FCC leveraging its consumer protection power to prompt the industry into action. As Amy Schatz reports in the Wall Street Journal, "[a]n FCC official said the agency would keep that rule-making process open in case any wireless carriers don't adopt the new industry standards."
Now, it's not unheard of for an agency to demand that an industry self-regulate or face government regulation. But the premises of the FCC's proposed "bill shock" regulations render the agency's leveraging of its consumer protection regulatory powers at least slightly less reasonable and commendable in this instance.
In November 2010 FSF Perspectives paper and in an April blog post, I described some dubious aspects of proposals for FCC "bill shock" regulation. Among other things, I suggested:
When the existence of an actual problem is in doubt and when the proposed regulatory measure extends beyond the scope of the alleged problem, an agency's leveraging of its regulatory powers over an industry to induce it to self-regulate approaches unseemliness. The better approach is for an agency to first clearly establish an existing consumer harm or problem, ascertain whether regulation is necessary to address the matter, and then target any needed regulation directly to the harm or problem.
Here, the wireless industry's voluntary adoption of usage alert messaging standards doesn't prove there is a real "bill shock" problem—let alone a problem commensurate with the scope of regulations initially proposed by the FCC. What it does prove is that the FCC wanted either new regulations or at least some changes in the industry's usual course of business dealings. The wireless industry took the FCC up on the latter course, understandably.
The end result is a net positive: wireless carriers will be providing extra reminders to consumers who approach or surpass their respective plan's voice, video, or data service usage levels, and doing so free from any new FCC rules. But given the problems besetting the FCC's proposed "bill shock" regulations that induced the new voluntary industry standards, the process leading up to this result isn't a model of agency action worth trumpeting. So the joint announcement by CTIA and the FCC deserves approval, but with an asterisk.
Most wireless carriers already provide a set of optional alert tools that consumers can use to monitor and receive updates regarding their monthly usage levels. So the Guidelines will result in a supplemental and more standardized set of opt-out alerts.
On their own terms, voluntarily-adopted industry standards regarding consumer overage alert messaging are a reasonable and commendable thing. However, "voluntary" takes on a qualified meaning when industry self-policing takes place in the shadow of looming agency rulemaking. In this instance, the standards adopted by the wireless industry are made in direct response to the FCC leveraging its consumer protection power to prompt the industry into action. As Amy Schatz reports in the Wall Street Journal, "[a]n FCC official said the agency would keep that rule-making process open in case any wireless carriers don't adopt the new industry standards."
Now, it's not unheard of for an agency to demand that an industry self-regulate or face government regulation. But the premises of the FCC's proposed "bill shock" regulations render the agency's leveraging of its consumer protection regulatory powers at least slightly less reasonable and commendable in this instance.
In November 2010 FSF Perspectives paper and in an April blog post, I described some dubious aspects of proposals for FCC "bill shock" regulation. Among other things, I suggested:
- There isn't a clearly established "bill shock" problem requiring FCC regulation;
- The FCC's proposed regulations exceed normal consumer protection concerns about fraud or unfair and deceptive trade practices since the overage charges are triggered by consumers using more services than they signed up for and such charges are part of their service contract terms;
- Aspects of the FCC's proposed regulations involving non-overage alerts and alerts regarding pre-paid service extending even beyond alleged "bill shock" problems would instead codify the FCC's second-guessing of business decisions and responsible and optimum usage by consumers; and
- Certain regulatory proposals advocated in public comments posed First Amendment problems by dictating certain mandatory icons and messages to be included in usage alerts and billing.
When the existence of an actual problem is in doubt and when the proposed regulatory measure extends beyond the scope of the alleged problem, an agency's leveraging of its regulatory powers over an industry to induce it to self-regulate approaches unseemliness. The better approach is for an agency to first clearly establish an existing consumer harm or problem, ascertain whether regulation is necessary to address the matter, and then target any needed regulation directly to the harm or problem.
Here, the wireless industry's voluntary adoption of usage alert messaging standards doesn't prove there is a real "bill shock" problem—let alone a problem commensurate with the scope of regulations initially proposed by the FCC. What it does prove is that the FCC wanted either new regulations or at least some changes in the industry's usual course of business dealings. The wireless industry took the FCC up on the latter course, understandably.
The end result is a net positive: wireless carriers will be providing extra reminders to consumers who approach or surpass their respective plan's voice, video, or data service usage levels, and doing so free from any new FCC rules. But given the problems besetting the FCC's proposed "bill shock" regulations that induced the new voluntary industry standards, the process leading up to this result isn't a model of agency action worth trumpeting. So the joint announcement by CTIA and the FCC deserves approval, but with an asterisk.
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