Friday, August 11, 2006

Court Reverses FCC Preemption of State Wireless Telephone Consumer Protection Measures

Wireless telephone consumers were dealt a severe blow when the FCC issued an order preempting states from protecting wireless telephone consumers. Although states cannot regulate the rates of wireless phone companies, the federal law allows them to regulate other terms and conditions. But when states responded to consumer complaints and attempted to regulate the presentation of new and confusing additional line item charges on wireless consumers' bills, the FCC essentially said that such truth in billing measures affected "rates" and so were preempted.

The National Associaton of State Utility Consumer Advocates (NASUCA) sought judicial review when its request for rehearing was denied by the FCC, and won a resounding victory in the Court of Appeals for the Eleventh Circuit. Relying on the plain meaning of the statutory language and dictionaries, the court decision rejects the FCC's reasoning, saying the agency's expansive interpretation of its power to set rates could not defeat the intent of the law allowing states to regulate terms and conditions of service other than rates:
A “rate,” as defined by the Oxford English Dictionary, is “[t]he amount of a charge or payment . . . having relation to some other amount or basis of calculation.” Oxford English Dictionary (2d ed. 1989). Other dictionaries define a “rate” as “[a]n amount paid or charged for a good or service,” Black’s Law Dictionary 1268 (7th ed. 1999), or “a charge per unit of a public-service commodity,” Merriam-Webster Online Dictionary, available at com/cgi-bin/dictionary (last visited June 27, 2006). “[A]s a basic rule of statutory interpretation, we read the statute using the normal meanings of its words.” Horton Homes, Inc. v. United States, 357 F.3d 1209, 1211 (11th Cir. 2004) (quoting Consol. Bank, N.A. v. Dep’t of Treas. 118 F.3d 1461, 1463 (11th Cir. 1997)). “In the absence of an indication to the contrary, words in a statute are assumed to bear their ‘ordinary, contemporary, common meaning.’” Walters v. Metro. Ed. Enters., Inc., 519 U.S. 202, 207, 117 S. Ct. 660, 664 (1997) (quoting Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 388, 113 S. Ct. 1489, 1494 (1993)).

The prohibition or requirement of a line item affects the presentation of the charge on the user’s bill, but it does not affect the amount that a user is charged for service. State regulations of line items regulate the billing practices of cellular wireless providers, not the charges that are imposed on the consumer. Because the presentation of line items on a bill is not a “charge or payment” for service, Oxford English Dictionary (2d ed. 1989), it is an “other term or condition” regulable by the states, 47 U.S.C. § 332(c)(3)(A).
Due to the ineffective FCC policies that do not protect consumers, efforts are underway in New York to protect consumers by reasserting state PSC jurisdiction over "terms and conditions" of wireless telephone service other than the rates. The state PSC dropped its supervision of wireless companies in 1997. See PULP's web page on wireless telephone consumer protection.

Also, it is expected that the wireless industry will redouble its frequent efforts to change the federal law to completely eliminate state consumer protections, and that consumers will vigorously oppose those efforts. Stay tuned.

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