by: Tom Corelis
While cautious, the FCC seems ready to step in to regulate
Cellular companies, finding themselves besieged by a litany of class-action lawsuits over their policy towards Early Termination Fees (ETFs), recently made a 180-degree turn into the arms of the FCC, asking it to standardize the “patchwork” of individual state regulations governing the practice.
That shift culminated in an open meeting held last Thursday, which brought representatives from the cellular industry, expert panelists, and FCC leadership together in order to lay out the groundwork for a new plan that would restructure the way consumers are charged – oftentimes amounting to more than $200 per phone – when they take an early exit from their cellular contracts.
Speaking last Thursday , Martin outlined his plans. He says ETFs should be “reasonably related” to the cost of equipment, prorated over the life of customers’ contract, and only be used to enforce contracts entered for an unspecified but “reasonable” length of time.
Martin’s requests for a “reasonable length of time” proved to be the most controversial. “What exactly does that mean? Is it reasonable to have to sign a two-year contract for wireless service?” writes business week Olga Kharif.
“If the FCC mandates that a one-year contract is more reasonable, that alone could turn the industry upside down,” she said.
A number of wireless companies have already implemented some of Martin’s suggestions. Verizon, for example, already prorates their early termination fees and has been doing so since 2006, said Executive Vice President Thomas J. Tauke
Despite its initiative, said Tauke, Verizon shudders at the “prospect of 50 different sets of rules related to consumer contracts with ETFs.”
Such regulation, enforced differently from state to state, would be “confusing” to consumers, burden providers with “unnecessary and unreasonable” extra costs – ultimately paid by subscribers – and “not be in keeping with the goal of a national wireless marketplace policy,” he said.
ETFs are necessary to subsidize equipment costs for customers , National Cable & Telecommunications Association Sr. Vice President Daniel Brenner, and they have provided “significant benefits” to customers and providers alike.
Wireless providers’ plea for a bailout from its legal predicament has certainly made for strange bedfellows. Neighboring battles with the FCC over 700 MHz spectrum policy, “network neutrality,” and P2P service blocking have seen telcos and ISPs take a chilled, if adversarial, stance towards Martin and his policymaking.
At this point, nothing is set -- any changes to ETF policy are, at this point, completely voluntary efforts by wireless companies. Martin has, thus far, not revealed his stance on a FCC-implemented policy of regulation – although he expressed skepticism in the current system.
“Not all consumers even benefit from [these class-action] lawsuits,” he said. “I do not believe a patchwork of 50 different sets of regulations with widely varying protections benefits consumers or the industry.”
