Monday, December 10, 2018

FCC Proposal Keeps Free From Unnecessary Regulation and Spam

At its December 12 meeting, the FCC will vote on a sensible proposal to keep popular wireless messaging services free from public utility regulation. By declaring texting and other wireless messaging services are Title I "information services," the FCC will ensure messaging service providers have flexibility to protect consumers from spam and other unwanted messages. 

For several yearsFree State Foundation President Randolph Mayand I have urged the Commission, in comments filed with the agency and in publications, to declare text messaging services to be lightly-regulated Title I information services. We applaud the Commission's proposal, finally, to provide deregulatory certainty for messaging services.

In today's competitive communications marketplace, wireless service providers routinely offer consumers messaging services bundled with voice and mobile broadband services. Text messaging or short messaging services (SMS) typically involve person-to-person transmission of texts up to 160 characters long. Multi-media messaging services (MMS) are person-to- person transmission of photos or video clips. The popularity of wireless messaging services is reflected in CTIA's estimate that, in 2017, American consumers sent a combined 1.77 billion SMS and MMS messages. 

As the Commission's draft proposal states: "The Communications Act, as amended, divides communications services into two mutually exclusive types: highly regulated 'telecommunications services' and lightly regulated 'information services.'" The Commission proposes to declare that SMS and MMS wireless messages meet the statutory definition of Title I information services because they involve the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications. 

For starters, when SMS and MMS messages are sent by users, they are routed through servers on mobile networks, stored on those networks, and forwarded to the recipients when their devices are able to receive them. Thus, the proposal finds: "This storage and retrieval capability is analogous to email service, which has been recognized under Commission precedent as an information service and similarly involves storage and retrieval functionality." 

Additionally, the Commission rightly recognizes adoption of its proposed Title I classification determination "will empower wireless providers to continue their efforts to protect consumers from unwanted text messages." Pointing to an estimated 2.8% spam rate for SMS compared to an over 50% spam rate for email, the Commission draft concludes:

[C]ontinuing to empower wireless providers to protect consumers from spam and other unwanted messages is imperative in light of the fact that the growth and popularity of SMS and MMS wireless messaging services have made them an attractive target for bad actors and spammers.

A Title II declaration would make it more difficult to combat unwanted messages. As the proposal says: "[I]n the context of voice service, under Title II, the Commission has generally found call blocking by providers to be unlawful, and typically permits it only in specific, well-defined circumstances." Under a Title II regime, messaging service providers would be restricted in their ability to stop spam from reaching consumers, thereby flooding consumers with messages they don't want.   

Finally, no good reason exists for increased regulation. SMS and MMS services emerged from and thrive in a competitive, essentially unregulated environment. Consumers have choices among competing wireless providers offering messaging service. Data cited in the draft Communications Market Competition Reportindicates that at the end of 2017, 92% of the population had access to at least four 4G LTE providers. Also, over-the-top applications and email are other popular means of communication, providing further competitive market checks on service provider behavior. Meanwhile, messaging service providers are subject to the Federal Trade Commission's authority to take action against unfair and deceptive trade practices. Antitrust is another available resource for safeguarding competition in the market. 

The Commission should adopt its proposed declaratory ruling on text messaging in order to preserve a light-touch regulatory environment and to allow service providers to continue to prevent consumers from getting spammed.