Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Consumer Information and Disclosure
Truth-in-Billing and Billing Format
IP-Enabled Services
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CG Docket No. 09-158
CC Docket No. 98-170
WC Docket No. 04-36
COMMENTS OF
THE UNITED STATES TELECOM ASSOCIATION
Its Attorney:
Genie Barton
607 14th Street, NW
Suite 400
Washington, D.C. 20005
(202) 326-7300
October 13, 2009
TABLE OF CONTENTS
Page
I.
Introduction and Executive Summary ...............................................................................1
II.
Argument ...........................................................................................................................2
III.
A.
There is a great deal of information already available to consumers ................................2
B.
Available data do not suggest that there is a widespread consumer problem....................5
C.
USTelecom supports the development of self-regulatory industry best practices to
ensure that consumers have all the disclosures they need in a form that is easy to
understand ..........................................................................................................................9
D.
Consumer education and outreach by the FCC are an important way to ensure that
consumers are aware and take advantage of information already available to them.......11
Conclusion .......................................................................................................................12
I.
Introduction and Executive Summary
The United States Telecom Association (USTelecom) commends the Federal
Communications Commission (FCC or Commission) for providing this Notice of Inquiry (NOI)1
which affords an opportunity for discussion by all stakeholders with an interest in ensuring that
consumers are well-informed and able to make the best choices of communications services to
meet their diverse needs. In a climate of vigorous competition, consumers have a host of
information available to them. Our members actively hone the information they present to
consumers and are constantly working to improve customer satisfaction and build a loyal
customer base by better educating and informing their customers. In addition, the FCC, the
Federal Trade Commission (FTC) and state Public Utilities Commissions (PUCs) are a rich
resource for consumers, as are consumer groups. With this richness of information, there is a
question whether further disclosure will simply produce greater information overload.
Therefore, care must be exercised to ensure that any problems are well understood and that all
the stakeholders conduct a dialogue to resolve them. To address any consumer issues,
USTelecom supports the development of voluntary industry self-regulatory best practices.
USTelecom further suggests that the FCC, in conjunction with other agencies involved in
consumer protection and education, launch a comprehensive government-wide consumer
education outreach effort, to ensure that all consumers are well-informed and aware of the
multiple sources of information available to them.
1
In the Matter of Consumer Information and Disclosure, Truth-in-Billing and Billing Format, and IP-Enabled
Services Notice of Inquiry (Aug. 27, 2009) (NOI).
II.
Argument
A.
There is a great deal of information already available to consumers
Consumers have many sources of data available now from service providers themselves,
from consumer groups and independent commentators, as well as from the FCC, the FTC and
state PUCs. This information leads to better informed choices by consumers, increased
competition, and the delivery of innovative and more differentiated consumer products and
services. It is important that the Commission survey and understand what information is now
available to consumers, whether consumers know where to find it and can understand it, and
whether they are using the information effectively to make informed choices. With this data in
hand, the Commission will be in a position to determine what, if any, further consumer
information is needed and, if so, how it can best be provided.
Let us briefly survey the information that service providers, consumer groups, the FCC,
the FTC and state PUCs provide on consumer issues. One of the ways that service providers
work to differentiate themselves is in customer service and innovations in the support that they
offer customers. In the highly competitive communications marketplace, service providers have
an economic incentive to provide information to consumers and to offer favorable terms of
service.2 Good information leads to better consumer satisfaction with their service provider and
consumer loyalty to that provider. USTelecom members work hard to provide information in
forms that will help to ensure that customers are not confused or frustrated. To help to ensure
customer satisfaction, our members are constantly fine-tuning the information they provide by
2
See Howard Beales, Richard Craswell & Steven C. Salop, The Efficient Regulation of Consumer Information, 24 J.
L. & ECON. 491 at 502 (1981) (Beales et. al.)(“[S]ellers have a substantial economic incentive to disseminate
information to consumers. Indeed, if information dissemination were costless to sellers, theory suggests that
disclosure would be complete.”). See also Comments of the Federal Trade Commission, In the Matter of A National
Broadband Plan for Our Future, at 3 (“Competition pressures producers to offer consumers the most attractive array
of choices with respect to price, quality, and other options. Competitive firms are constantly searching for superior
profit opportunities as they seek to win the favor of customers, who effectively vote for preferred products and
services with their dollars.”).
2
learning what consumers want from consumer focus groups and other outreach efforts. For
example, members have undertaken initiatives to make their web sites user-friendly to ensure
that consumers have the information that they want and need at their finger tips. Frequently
asked questions are vetted and revised to ensure that answers are in plain English. Numerous
services have been developed by our members to assist consumers on the Web, including onestop shopping sites with click through menus that provide customer support for all issues;3
interactive explanations of how to read bills;4 guidance on Internet security and tools to protect
the customer against viruses and botnets;5 and speed tests that consumers can use at home to
check the speed that they are receiving.6 Our members offer special services—such as Braille
and large type bills, TTY service, and Spanish language customer care—for their customers who
need them.
There are also multiple independent sources of consumer information that educate
consumers about the types of Internet services to choose from, provide comparison charts to help
consumers select the service that is right for them, and offer critiques of service providers. For
example, various independent sources, service providers, and consortia of providers offer
consumers information about Internet service providers and compare service offerings.7
3
See, e.g., http://www.qwest.com/; (last visited Oct. 7, 2009)
See, e.g., https://www.customerservice.att.com/assistance/sample_bills/sample_bill.jsp (last visited Oct. 7, 2009.
5
See, e.g., http://security.iowatelecom.net/ (last visited Oct. 7, 2009).
6
See e.g., http://speedtest.windstream.net/ (last visited Oct. 7, 2009).
7
See e.g. http://broadbandbuyer.com/; (comparison shopping for broadband provider in consumers’ area to the
specifications for service customer provides); http://www.high-speed-internet-access-guide.com/ (providing basic
information on broadband service, explaining why faster speeds are helpful, and listing major types of service
providers); http://www.thebroadbandguide.com/ (providing information on types of Internet service providers and
comparisons of the major providers); http://broadband.theispguide.com/ (provides a chart comparing ISPs on all
platforms as well as a zip code lookup to see what providers are available in a consumer’s area). There are a host of
these sites available simply by doing an online search.
4
3
Consumer magazines, such as Consumer Reports, offer guidance and explanations of services.8
Multiple speed tests of broadband service are also available to broadband consumers.9
We also note the FCC offers approximately 150 information sheets on its website that
explain a variety of issues to consumers, from how to get broadband service to how to read a
telephone bill or prevent cramming.10 The FCC’s Consumer Center is accessible by email,
telephone or by writing to the Commission.
The FTC also provides consumer information and help on communications topics.11 The
information focuses on communications-related fraud involving charities, phone products and
services, prizes and sweepstakes, telemarketing scams and unauthorized charges, as well as the
National Do Not Call Registry. State PUCs also provide information to consumers. For
example, the California PUC has conducted extensive consumer education about
communications-related issues and has developed a recognizable icon to signal to consumers
where consumer information on communications services is available on its website and in its
publications.12
Consumers have the opportunity to obtain redress for problems from their carrier, the
FCC, the FTC and/or their state PUC, depending on the issue. The FCC does an excellent job of
explaining this complex jurisdictional split on its fact sheets, in cases where it shares
8
In addition to its annual cell phone review, Consumer Reports also has done a guide to broadband. See
http://www.consumerreports.org/cro/electronics-computers/computers-internet/internet-and-other-services/internetservice-providers/internet-service-providers-2-07/overview/0207_isp_ov_1.htm. Other consumer services, such as
the Consumerist, http://consumerist.com/347835/best-internet-tv-phone-service-providers and Consumer Search,
http://www.consumersearch.com/isp, also provide reviews (last visited Oct. 13, 2009).
9
See e.g., http://www.dslreports.com/tools (providing links to a host of testing sites); see also,
http://www.speakeasy.net/speedtest/; http://www.speedtest.net/; http://www.auditmypc.com/broadband-speedtest.asp; http://performance.toast.net/ (last visited Oct. 9, 2009).
10
See http://www.fcc.gov/cgb/information_directory.html (last visited Oct. 7, 2009).
11
See http://www.ftc.gov/bcp/menus/consumer/phone.shtm (last visited Oct. 9, 2009).
12
See http://www.calphoneinfo.com/ (last visited Oct. 9, 2009).
4
jurisdiction.13 Not only does the Commission explain where to file—the FCC, the state PUC, or
the FTC—depending on the nature of the complaint, it also provides guidance as to what
information should be included in a complaint filed before the FCC. There is no evidence that
consumers are unable to find a forum in which to resolve a complaint.
With these multiple sources of information and redress already available, the
Commission should carefully weigh the potential benefits of any new information requirements
against the potential problems that too much information can sometimes pose. Having to digest
too much data can cause consumers to suffer from “information overload.” Rather than leading
to better decision-making, too much information causes consumers to short-circuit the rational
decision process. There is a vast literature in behavioral economics regarding information
overload, suggesting that mandating disclosure can be counterproductive and itself lead to
greater consumer confusion.14 The courts and Congress have also grappled with this issue,
concluding, for example, with respect to the Truth in Lending Act that more disclosure was not
necessarily better and that “meaningful disclosure” was the proper standard.15
B.
Available data do not suggest that there is a widespread consumer
problem
To create meaningful disclosure, one first must have empirical data on what consumers
need and want and how they can best absorb the information. The data that we have suggests
that consumers are largely satisfied with their telephone service. While the NOI asserts that its
data on consumer complaints suggest that billing is one of the top issues consumers complain
13
See, e.g., http://www.fcc.gov/cgb/consumerfacts/cramming.html (last visited Oct. 9, 2009).
See, e.g., See Troy Paredes, “Blinded by the Light: Information Overload and its Consequences for Securities
Regulation” (2003) 81 (3) Washington ULR 417. Malcolm Gladwell, The Tipping Point (London: Abacus, 2001),
175ff.
15
See 444 U.S. 555, 568-69 (1980)(“The concept of “meaningful disclosure” that animates TILA, cannot be applied
in the abstract. Meaningful disclosure does not mean more disclosure. Rather, it describes a balance between
“competing considerations of complete disclosure . . . and the need to avoid . . . [informational overload.].” (italics
in original)(internal citations omitted).
14
5
about, close scrutiny of the FCC’s own data reveals that this is not the case. The FCC cites a
series of consumer complaint statistics in the NOI, presumably indicating deteriorating customer
satisfaction with billing practices.16 We question the validity of these statistics as indicators of a
widespread problem in customer satisfaction with billing practices and, therefore, as a basis for
FCC action.
First, to say, as the FCC does, that “billing-related inquiries and complaints are among
the top categories of consumer complaints filed with the FCC” [emphasis added]17 gives the
misimpression that these complaints comprise a significant portion of complaints. On the
contrary, billing and rate complaints comprised only 10% of total reported complaints in 2007
and 2008, down from 14% in 2006.18 See Figure 1. In contrast to this modest 10% figure,
complaints arising from the Telecommunications Consumer Protection Act (“TCPA”) accounted
for 86% of total wireline telecommunications complaints in 2007 and 2008, up from 81% in
2006.19 The TCPA pertains to issues such as junk faxes and the do-not-call registry that are
frequently out of providers’ control. In addition, we note that carrier marketing and advertising
comprised only one percent of complaints in 2006 and 2008, the periods for which data are
provided. This suggests that, contrary to the surmise of some, consumers do not find advertising
confusing or misleading.
16
NOI at ¶ 15.
Id.
18
Federal Communications Commission, Consumer & Government Affairs Bureau, Quarterly Reports On Informal
Consumer Inquiries and Complaints, First Quarter 2006 – First Quarter 2009 at
http://www.fcc.gov/cgb/quarter/welcome.html (last visited October 9, 2009).
19
Id.
17
6
Figure 1: Share by Category of Wireline Telecommunications Complaints
Processed by the FCC Consumer & Government Affairs Bureau
2006
2007
2008
1Q09
TCPA (Junk Fax, Do-Not-Call, Other)
81%
86%
86%
87%
Billing & Rates
14%
10%
10%
11%
Service Quality
3%
2%
2%
2%
Carrier Marketing & Advertising
1%
0%
1%
0%
Cramming
1%
0%
1%
0%
Slamming
1%
2%
0%
0%
Source: FCC Quarterly Reports On Informal Consumer Inquiries and Complaints, First Quarter 2006 – First Quarter 2009
Second, the FCC cites, as a basis for its inquiry and presumably potential action, the
growth of billing-related complaints from 2006 to 2008 for wireline telecommunications (50%)
and wireless telecommunications (24%). But data regarding aggregated complaint volume
indicate that the FCC should not, without more, conclude that the growth in the billing-related
complaints that it cites is causally linked to an underlying deterioration in billing and rate
practices, or in customer dissatisfaction with billing and rates. Specifically, an analysis of the
complaint data indicates that all forms of consumer complaints grew during the 2006 to 2008
period and that most tellingly, overall complaints grew at a much faster rate than billing-related
complaints. As would be expected from the discussion above, the largest increases were with
respect to the TCPA. TCPA-related wireline complaints grew more than 130% during the
period, more than two and a half times faster than the wireline billing-related complaints.
Moreover, taken together, wireline non-TCPA complaints grew at a faster rate than wireline
billing-related complaints. See Figure 2. Thus, growth in billing-related complaints has been
less than growth in TCPA related complaints and complaints overall.
7
Figure 2: Growth of FCC Consumer Complaints by Category, 2006 - 2008
2006
2008
Growth
Cable & Satellite
2,261
6,697
196%
Broadcast (Excluding Indecency & Obscenity)
4,740
11,394
140%
Wireless
17,415
61,938
256%
TCPA – Wireless
1,707
42,154
2369%
Other – Wireless
15,708
19,784
26%
65,027
140,780
116%
TCPA – Wireline
52,579
120,812
130%
Other – Wireline
12,448
19,968
60%
89,443
220,809
147%
Total Non-TCPA (Excluding Broadcast Indecency & Obscenity)
35,157
57,843
65%
Wireline + Wireless TCPA
54,286
162,966
200%
Combined Wireless and Wireline Billing & Rates Complaints
17,787
24,416
37%
Wireline Billing & Rates
8,965
13,486
50%
Wireless Billing & Rates
8,822
10,930
24%
Wireline
Total (Excluding Broadcast Indecency & Obscenity)
Selected Subtotals
Source: FCC Quarterly Reports On Informal Consumer Inquiries and Complaints, First Quarter 2006 – First Quarter 2009
Given that the overall universe of complaints is growing, the most likely inference is that
the growth in billing-related complaints is being driven by external factors causing a general
increase in complaints filed. Such factors might include more consumers accessing the FCC
website with broadband connections that promote ease of use of the online complaint forms or
greater awareness and use of the FCC complaint process due to FCC education efforts. Given
that the overall universe of complaints is growing at a faster rate than billing related complaints,
the FCC is not free to conclude that growth in the billing-related complaints it cites are causally
linked to an underlying deterioration in billing and rate practices, or in widespread customer
dissatisfaction with bills and rates.
Finally, even though complaints to the FCC appear to be growing, the underlying
numbers of complaints filed remains quite small in comparison to the number of subscribers to
wireline telephone service. For example, in 2008 there were 19,968 non-TCPA wireline
complaints out of the more than 154,600,000 wireline access lines in use in the United States in
8
2008, or 0.01%. Billing-related complaints represent only a portion of this percentage: 0.009%.
Even including the TCPA complaints, there were 140,780 wireline complaints, or 0.09% of
wireline access lines. Thus, a truly tiny proportion of subscribers appear to be filing complaints
about their telephone service with the FCC, and a fraction of those related to billing and rates.
C.
USTelecom supports the development of self-regulatory industry best
practices to ensure that consumers have all the disclosures they need
in a form that is easy to understand
The NOI asks whether voluntary industry codes and best practices are a useful way to
ensure that consumers are well informed and protected. We agree with that suggestion.
Voluntary best practices have been developed successfully, as the NOI notes.20 We also note
that the Commission has itself previously successfully facilitated such an effort.21 Voluntary
industry best practices can be enforceable under the Lanham Act against any service provider
who fails to abide by its pledge, without the need to formulate further regulations.
USTelecom believes that industry self-regulatory best practices and further consumer
education are the best ways to remedy any problems that this Inquiry identifies. Such measures
can be put in place much more quickly than regulations. Thus, to the extent that after conducting
this Inquiry, the Commission concludes that further disclosures are necessary, USTelecom urges
that efforts be focused towards reaching consensus on industry self-regulatory best practices.
Voluntary disclosure through industry-developed best practices has real advantages over
regulations. As economists teach:
[T]here is usually an advantage in designing disclosure remedies that leave as large a role
as possible to normal market forces, to restrict the market as little as possible. The goal
20
See NOI at ¶ 12.
See “FCC and Industry Announce Best Practices Guidelines to Protect Consumers from Cramming,” News
Release (1998)(noting that the development of voluntary guidelines took much less time than a traditional
rulemaking would have taken).
21
9
should be not to specify the exact information to be disclosed and the exact manner in
which it will be disclosed but to give sellers the proper incentives to make these decisions
on their own. This reduces the consequences of a bad decision by the government since
it avoids forcing sellers to disclose information in an ineffective manner or to disclose
information which, because of a change in circumstances, is no longer desired by
consumers. It also increases the effectiveness of the remedy by harnessing sellers' own
incentives to develop the most effective ways of informing consumers. Thus, innovation
should be encouraged by leaving sellers latitude to experiment.”22
USTelecom supports an industry self-regulatory initiative that would provide meaningful
and easy-to-understand disclosures of essential information to consumers and it is investigating
with others in the industry how such disclosures could be structured and what they should
contain. Such an undertaking must wrestle with and resolve the complexities in the disclosure of
various types of information, particularly in the context of Internet service. It is important, as the
FTC noted in its comments on the National Broadband Plan, that when model voluntary
disclosures are formulated that they be tested with consumers to ensure that they are genuinely of
benefit.23 If the Commission decides to conduct a series of workshops, USTelecom would work
with that process to help to develop consensus on what additional disclosures, if any, consumers
want and need. Finally, USTelecom believes that insofar as consumers want technical
information concerning their service, any such standards be developed, in conjunction with an
expert technical body such as the Commission’s own Technical Advisory Committee (TAC), so
22
Beales, et. al. at 522-33.
FTC Comments at (“research also demonstrates that disclosures must be developed carefully, because even wellintentioned disclosures can actually harm consumers. To be most effective, uniform disclosures should be tested
with real consumers, using controlled, quantitative, objective tests of consumer understanding.’).
23
10
that consumers can make meaningful comparisons and that data is standardized along correct
technical lines.
D.
Consumer education and outreach by the FCC are an important way
to ensure that consumers are aware and take advantage of
information already available to them
Consumer education can often be an even more effective method of protecting consumers
than requiring increased disclosure and should not be overlooked.24 Therefore, USTelecom
believes that in addition to facilitating the development of industry-wide voluntary best practices,
the Commission should undertake a consumer education initiative with other stakeholder
agencies, just as it worked in conjunction with NTIA on a government effort to educate
consumers about the DTV transition. Many are unaware of the many resources that government
agencies already provide and the tools they offer to help answer common consumer questions.
A government educational outreach campaign has many advantages over alternatives. In
the fast-moving world of communications, educational materials can provide greater flexibility
because they can be modified more frequently than disclosures mandated by regulation. A
centrally coordinated campaign can ensure that the message is clear and does not confuse
consumers. 25 Moreover, it can help to point consumers to more in-depth sources of further
information and to groups that provide training that will further assist consumers.26 And perhaps
24
Beales, et. al. at 531. (“Consumer education is often overlooked as a means of dealing with incomplete
information.”). See also, State of California Public Utilities Commission, Decision Issuing Revised General Order
168, Market Rules to Empower Telecommunications Consumers and to Prevent Fraud (2006) (“Consumer education
is the cornerstone to empowering and protecting consumers in a competitive telecommunications
market.”)(instituting state-wide consumer education initiative).
25
Beales et. al. at 531 (“One other advantage of consumer education over a disclosure approach is that an education
campaign can be targeted more precisely to those who need the information. This may make it possible to convey
the essential information more effectively. Because the advertising messages can be changed more frequently, the
problem of wear-out can be minimized. Because the campaign can be centrally coordinated, the inefficiency which
is likely to result from multiple exposures in different product advertisements can be avoided.”).
26
For example, a clearinghouse of consumer information could include reference to such not-for-profit groups as
One Economy Corporation which provides computer training that would allow consumers to access the disclosure
information available online that has been referenced above. See http://www.one-economy.com/ (last visited Oct.
10, 2009).
11
most important, it can be tailored to specific groups who may be less able than others to access
and understand disclosures or independently search out information. For example, there is a lag
in computer use and broadband adoption among vulnerable groups such as the poor, the elderly,
and those living in rural areas.27 Yet these are the very groups that we should be most concerned
are aware of information about communications services. These groups are much more likely to
be missing access to the richest source of consumer information available today—the Internet.
The Commission must find alternative means to reach these vulnerable groups. Such an
educational outreach campaign may even help to spur adoption.
We suspect that there are consumers who are not taking advantage of the multiple
consumer resources that the FCC, the FTC, and state PUCs have available to help them. We
urge that the FCC and the FTC join forces,28 partnering with state PUCs as well, to make
consumers more aware of what information and avenues of redress are available to them. We
think that workshops around the country and a series of local outreach campaigns could make a
real difference with respect to consumer utilization of the sources now available. Providing
handouts of the Consumer and Government Affairs Bureau’s many consumer fact sheets at these
workshops could, without more, greatly improve consumers’ knowledge and understanding of
the issues of importance to them.
III.
Conclusion
The NOI process is the right way to gather information about what consumers want and
need. As experience and theory both teach us, to be effective, disclosures must avoid
27
See, e.g., Organisation for Economic Co-operation and Development (OECD), Ministerial Background Report,
Protecting and Empowering Consumers (2008) at 5 (“Policy makers and regulators should develop a better and
fuller understanding of the needs and motivations underlying consumer behaviour [sic] in telecommunications
markets, especially those of vulnerable consumers (such as those in rural areas, the elderly, minors, disabled, those
on low incomes, the unemployed).”).
28
The joint FCC/FTC news release on privacy and security is an excellent example of how these two agencies can
work together on consumer education issues. See FCC and FTC Chairmen Jointly Encourage the Public to Take
Safeguards to Protect Themselves, Their Privacy, and Their Personal Information, News Release (Oct. 9, 2007).
12
information overload and meet genuine consumer needs. USTelecom is ready to work with all
industry representatives and other stakeholders to craft voluntary industry best practices that will
provide meaningful and effective consumer disclosure and simplify the information now being
disclosed to consumers. Coupled with that effort, we urge the FCC and other government groups
to work together to launch a major new government-sponsored consumer education initiative.
Respectfully submitted,
UNITED STATES TELECOM ASSOCIATION
By:_____________________________________
Genie Barton
607 14th Street, NW, Suite 400
Washington, D.C. 20005
202-326-7300
October 13, 2009
13