Friday, March 29, 2019

FCC Should Close Its Toll-Free Texting Proceeding and Tackle Robocalls

There were nearly 5 billion robocalls in February, according to press reports. A substantial number of robocalls are scams or unwanted calls. Yet during that same month, there likely were zero instances of toll-free phone numbers being enabled to receive text messages without authorization by business subscribers. That's because toll-free texting isn't a genuine consumer protection problem – but robocalls are a serious and growing problem.

Instead of devoting any further agency resources to considering proposals to impose unhelpful new regulation on toll-free texting, the FCC should promptly close its toll-free texting proceeding and direct its attention to actions which will curb unwanted robocalls. To its credit, the Commission is now trying to determine what further actions it can take to address the robocall problem. 

Although texting is ubiquitous for mobile wireless services, many enterprises sign up with texting service providers to receive texts to their landline numbers, including toll-free numbers. So it was rather unexpected when in 2018 the FCC proposed rules to control authorizations for text enabling of toll-free numbers. Free State Foundation President Randolph May and I filed public comments with the FCC regarding its proposal. As we explained, there is no good reason for regulating authorization of texting services for toll-free numbers. Rather, there are several reasons why regulating toll-free texting would be unwise and harmful. 

First, there is no market failure problem regarding texting and online messaging services.

According to a CTIA estimate, in 2017 American consumers sent a combined 1.77 billion text messages (counting 160-character texts as well as photos and video clips). Competing mobile wireless providers offer consumers service plans that bundle unlimited texting with voice and data. Also, instant messaging, social media, and email are widely available alternatives for consumers. Furthermore, the record evidence compiled in the FCC's proceeding shows no clear-cut instances of consumer harm caused by unauthorized text-enabling of toll-free numbers. 

Second, new regulation would undermine the non-regulated, pro-innovation environment in which texting emerged – and which FCC policy supports.

Text messaging services are a technological and marketplace innovation success story. They developed outside the strictures of legacy telephone regulation. Moreover, in December 2018, the FCC issued an order declaring that text-messaging services fit within the statutory definition of non- or lightly-regulated “information services” under Title I of the Communications Act. The Commission's order acknowledged that SMS spam texting rates of around 2.8% are drastically lower than email spam rates of over 50%. And the order stated that "continuing to empower wireless providers to protect consumers from spam and other unwanted messages is imperative." Just as the order found that legacy telephone regulation under Title II would be harmful to innovation necessary to combat unwanted texts, expanding legacy regulation to text-enabling of toll-free numbers would be equally harmful. 

Third, the FCC's 2018 Declaratory Ruling addressed any potential problems.

In itsDeclaratory Ruling from June 2018, the Commission "clarif[ied] that only a toll-free subscriber may authorize the text-enabling of a toll-free number and that such authorization must occur beforea toll free number is text-enabled." The Commission's ruling sufficiently set forth the rights of toll-free number owners, facilitating recourse at the Commission or in the courts in cases of alleged violations. Additionally, text messaging service providers have confirmation processes in place for toll-free number owners. Those providers do not stand to gain from text-enabling numbers without authorization, and existing market incentives are adequate to protect consumers. If text-messaging providers abuse the confirmation process, they will damage their reputation and lose valuable business to rival providers and messaging platforms – of which there are many.

Fourth, new regulation would create obstacles to addressing any actual instances of unauthorized text-enablement of toll-free numbers.

The Commission's proposal would require "Responding Organizations" (RespOrgs) to verify that toll-free number owners consented to text-enablement. This would mean inserting RespOrgs – which assign toll-free numbers for voice calling – into an entirely new role of administering already assigned toll-free numbers for texting. But owners of toll-free numbers would not benefit by this because RespOrgs don't possess reliable information regarding the identity of toll-free number owners. Rather, RespOrgs would accrue, wrongfully, a benefit from Commission regulation handing them a new line of business. 

In sum, it's time for the FCC to close its toll-free text-enabling proceeding and to focus the freed-up resources on combatting the increasing number of unwanted robocalls to consumers.