FTC Urges Repeal of Common Carrier Exemption During Reauthorization Hearing
Wireless and wireline carriers are girding for a fight once again over provisions in the latest version of the Senate FTC reauthorization bill that would open the door to more FTC oversight of the telecom industry. A provision in the bill would eliminate the common carrier exception that bars the FTC from overseeing certain activities by telecom common carriers that are regulated by the FCC. While such language has been introduced in past Congresses, this is the first in which Democrats control both the Senate and the House.
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The telecom and technology landscape has changed so radically in the twelve years since the last reauthorization that the FTC needs expanded powers, FTC commissioners told the Senate Commerce Committee Tuesday.
“I anticipated it,” said a wireless industry lobbyist. “Traditionally, every year, they've reported out a reauthorization bill.” If the provision were to pass Congress, carriers would be subject to dual regulation, the lobbyist said. “We think this is a highly competitive market and we're skeptical of the need for new regulation,” he said. Since the FTC and FCC take a different approach to regulation, with the FTC more focused on “back end, case-by- case enforcement rules,” carriers would caught “betwixt and between” the agencies, the source said. “There should only be one government agency overseeing the telecom industry,” a wireline source said.
The Federal Trade Commission Reauthorization Act, introduced Tuesday by Sens. Daniel Inouye (D-Hawaii) and Byron Dorgan (D-N.D.) would, among other provisions, repeal the common carrier exemption, which bars the FTC from investigating and prosecuting common carriers for anticompetitive behavior and deceptive, unfair practices and fraud. The exemption became law more than 70 years ago, FTC Chairman William Kovacic noted in his testimony. Since then, the industry has changed “just a little,” he joked.
“The failure to revisit” the common carrier exemption “means almost everyday of the week we bump into limitations,” Kovacic said. Commissioner Jonathan Leibowitz agreed that “the first defense raised is common carrier.” The commission does receive complaints about wireless carriers, particularly when it comes to advertising claims. As Sen. Amy Klobuchar (D-Minn.) said: “Everyone I know in my state has a cell phone story.”
But Kovacic was quick to point out that the point is “not to slight other agencies” and that the FTC “shares certain responsibilities with the FCC… I “realize there are inherent tensions arise when two agencies have overlapping responsibility” but the FTC could bring its “large body of experience and enforcement capability to bear on advertising issues” with wireless carriers, he said. Regulating national and regional advertising is “one of the things we do best,” he said. The commission is holding a town hall meeting May 6-7 in Washington to discuss arising issues in mobile marketing or “m-commerce.”
The Reauthorization bill would also give the FTC authority to seek civil penalties for violations of Section 5 of the FTC Act, which prohibits “unfair methods of competition” and “unfair or deceptive acts or practices.” Commissioners told the Committee that current remedies are not enough to deter those who deploy spyware, violate consumers’ data security and engage in pretexting. The bill would also let the FTC file its own civil penalty cases in its own name, eliminating the requirement that the commission refer such cases to the Justice Department.