FTC ARGUES TO SENATE FOR COMMON CARRIER JURISDICTION

FTC made pitch to Senate for jurisdiction over common carriers Wed. in Commerce Subcommittee on Consumer Affairs. FTC Comr. Sheila Anthony said agency’s lack of jurisdiction had been “impediment” as “fraud and deception” had emerged from aggressive business activity in telecom sector. FTC argues that its exemption from common carrier regulation, which was enacted when telephone service was regulated monopoly, prevents it from bringing cases involving false advertisements by competitive telecom companies. “The bottom line is that the common carrier exemption has outlived its purpose,” she said. Both Sens. Dorgan (D-N.D.), subcommittee chmn., and Wyden (D-Ore.) expressed support for FTC’ gaining jurisdiction. “I seems like the FTC has a good argument here,” Wyden said. Congress must take legislative action to make jurisdictional changes, which FTC Chmn. Timothy Muris has said isn’t likely until next session.

Lack of common carrier jurisdiction could hurt FTC in areas besides advertising, Anthony said. Without jurisdiction, FTC can’t enforce antitrust law to ensure fair competition, she said. She described scenarios where telecom companies might refuse to do business with Internet providers in effort to discourage Internet telephony. But most discussion focused on advertising and fraudulent business activity involving common carriers. Even in areas where court has ruled FTC has some authority to pursue complaints, such as cramming and misleading advertising, defendants often argue that FTC’s common carrier exemption prevents it from acting. Anthony said frequent litigation of common carrier issue, even in situations where FTC’s jurisdiction has been established, is costly, timely and generally problem.

Anthony was careful not to criticize FCC’s record on common carrier consumer protection, for which Dorgan said her diplomacy was worthy of State Dept. She said FTC’s expertise in area would be beneficial to consumers: “We bring value to the table.” Senators weren’t so kind to FCC. “I don’t believe there is enough aggressive action being taken by the current regulatory agency,” Dorgan said, referring to FCC. “This subject needs to be examined. It’s an interesting proposal.”

Senate Commerce Committee Chmn. Hollings (D-S.C.) also was critical of FCC. He questioned push to “re-monopolize” telecom industry and was critical of FCC Chmn. Powell’s comment that Bell company could buy WorldCom. He appeared supportive of FTC’s gaining common carrier jurisdiction, saying it could be “last hope” to prevent wholesale consolidation in telecom market. Hollings said FTC funding would remain constant. Senate Appropriations Committee is considering FTC’s and other agencies’ budgets.

FCC said it was “committed to protection of consumers of telecommunications services,” said Dane Snowden, chief- Consumer & Govt. Affairs Bureau. “The FCC has vigorously enforced extensive consumer protections rules in a number of areas, for instance, slamming, telemarketing, truth-in- billing, customer privacy and operator services, and will continue to do so,” Snowden said. “We look forward to working with the FTC to ensure our respective regulations work harmoniously to provide a comprehensive plan for protecting consumers.”

USTA argued against common carrier jurisdiction for FTC, saying it would create “duplicative, conflicting and costly overlap” of jurisdictions. “USTA is not opposed to regulatory authorities, both state and federal, having the jurisdiction to police, enforce, remedy and regulate telecommunications marketing practices,” said Lawrence Sarjeant, USTA vp-law and gen. counsel. “There is no existing lack of legal authority. The FCC has already fully occupied the field when it comes to interstate communications carriers.” Sarjeant also said it was inappropriate time to give FTC such jurisdiction because FCC was in proceedings to determine whether Internet should be classified as telecom service or information service.

Proposed Do Not Call List (DNCL) also was hot topic in hearing. Several witnesses were critical of proposal. Representatives of Special Olympics and Fraternal Order of Police said FTC’s proposal would have significant impact on fundraising efforts. Direct Marketing Assn. (DMA) said list would be detrimental to legitimate telemarketing business. FTC said proposal was very popular with public, saying had it received nearly 40,000 comments supporting idea. AARP also supported DNCL.

Committee’s ranking Republican McCain (Ariz.) asked about efforts to prevent marketing of violent material to children. Swindle said there hade been some (but not great) improvements in TV and other marketing avenues. Programming geared for either children or adults didn’t seem to be problem, but issues still remained for “middle ground,” he said. However, record industry continues to put “stick in our eye,” Swindle said, emphasizing industry’s proficiency at arguing First Amendment right. “We don’t care what they publish, just don’t try to sell inappropriate material to children,” said Swindle, who got agreement from McCain.