Regulation - What is it Good For?

Deregulating Text Messaging

“This is one of the oddest dockets I’ve ever seen”. That’s roughly quoting myself several times over the last year as I read some of the things that the current FCC is up to. I find myself saying that again as I read the FCC’s recent docket that proposes to classify SMS text messaging as a Title I information service. Their stated reason for the reclassification is that it will make it easier to fight text message spam, and that stated reason is where the FCC loses me.

Text message spam is a real thing and I’ve gotten some annoying text spam over the last year and I’d sure hate to see my texting inbox get polluted with crap like my email inbox. However, I doubt that you’ll find any technologist in the industry that will tell you that the way to fight spam of any kind is by waving a magic wand and changing the way that something is regulated. The way you fight spam is to put barriers in place to detect and block it – and that is something that only the carriers that control the flow inside of a communications path can do. It’s the solution that the FCC themselves just pushed recently to try to stop robocalling – by demanding that the telephone industry find a solution.

Yet here sits a docket that blindly declares that reclassifying texting as an information service will somehow dissuade bad actors from sending spam text messages. I’m pretty sure that those bad actors don’t really care about the differences between Title I and Title II regulation.

One of the interesting things about this filing is that past FCCs have never definitively said how texting is regulated. Over the years the industry has come to assume that it’s regulated under Title II just like a telephone call – because functionally that’s all a text message is, a telephone call made using texted words rather than a voice call.

To some extent this docket is the first time the FCC has every officially addressed the regulatory nature of text messaging. In the past they made rulings about texting that implies a regulatory scheme, but they never have officially put texting into the Title II category. Now they want to remove it from Title II authority – the first time we’ve ever been told definitively that text is already a Title II service. Here are some of the past FCC treatment of the regulatory nature of text messages:

  • In 1994 the FCC ruled that systems that store and forward telecommunications messages, like SMS texting are ‘interconnected’ services, which at that time were clearly regulated by Title II. But there was no specific statement at the time that texting was a Title II service.
  • In the Telecommunications Act of 1996 the FCC defined a telecommunications service for the first time – which was defined as a service that uses telephones and the PSTN to communicate. The 1996 Act didn’t mention texting, but it clearly fits that definition.
  • In 2003 the FCC declared that text messages were ‘calls’ when the agency implemented the Telephone Consumer Protection Act, which was the same treatment given to other Title II telephone services.
  • In 2007 the FCC included texting as one of the Title II services for which cellular carriers must allow roaming.
  • In 2011 USAC began enforcing the inclusion of text revenues as a Title II interstate revenues that used to assess monies owed to the Universal Service Fund.

All of these regulatory actions implied that texting is a Title II service, although that was never explicitly stated until now, when the FCC wants to reclassify it to be an information service. Reclassification doesn’t pass the ‘quack like a duck test’ because telephone calls and anything like them fit squarely as Title II services. Texting is clearly a type of telephone call and any person on the street will tell you that a text message from a cellphone is just like a phone call using text rather than voice.

Unfortunately, the only conclusion I can draw from this docket is that the FCC has an ulterior motive since their stated reasons for wanting to reclassify texting are pure bosh. There seem to be no obvious reasons for the reclassification. There are no parties in the industry, including the cellular carriers, that have been clamoring for this change. Further, the change will have the negative impact of further shrinking the Universal Service Fund – and expanding rural broadband is supposedly the number one goal of this FCC.

This is disturbing for somebody who has followed regulation for forty years. By definition, regulatory agencies are not supposed to push for changes without first opening an industry-wide discussion about the pros and cons of any suggested changes. Regulators are not supposed to hide the motives for their ideas behind false premises.

The only justification for the FCC’s proposed ruling that I can imagine is that the FCC wants to kill all Title II regulation. It seems they are on a mission to eliminate Title II as a regulatory category to make it hard for future FCC’s to reregulate broadband or to bring back network neutrality.

If that’s their real agenda, then we ought to have an open discussion and ask if we ought to eliminate Title II regulation – that’s how it’s supposed to work. The rules establishing the FCC call for a process where the agency floats new ideas to the world so that all interested parties can weigh in. The FCC is not ready to face the backlash from openly trying to kill Title II regulation, so instead of an open debate we are seeing a series of ridiculous attempts to chip quietly away at Title II regulation without overtly saying that’s their agenda.

In my opinion the time when we ought to stop regulating telephone services is getting closer as technology changes the way that we communicate. But that time is not here and there is still room for monopoly abuse of text messaging. There are a number of examples over the last decade where carriers have blocked text messages – sometimes when they disagreed with the content.

I’m disappointed to have an FCC that is using regulatory trickery to achieve their agenda rather than having a bold FCC that is willing to have the public debate that such a decision deserves. Telephone and related services like text messaging were regulated for many reasons and we ought to examine all of the pros and cons before deregulating them.

I’m guessing that this FCC wants to kill Title II regulation without ever having to tell the public that’s their agenda. I think they want to deregulate text messaging and then point to that deregulation as the precedent to justify deregulating all Title II services without having to suffer to criticism that is sure to come when the public realizes this closes the door on net neutrality.

Regulation - What is it Good For?

The Unregulated Texting Market

Comcast recently started texting me about my cable bill. And like most things they do they didn’t quite get it right. They sent me three texts telling me I was being billed and when they sent me a second text telling me I had paid I discontinued the texting service. Since my bill is identical month to month and I always pay my bill on time, I thought getting five texts was annoying.

I would contrast this to the texting service that I have had with AT&T wireless for many years. They send me a text when my bill is ready to review and they notify me a second time when they have billed against my credit card. I think in the dozen years I have used them that they have only sent me a few other texts, such as asking me to rate customer service after I visited their store. I am sure that if I didn’t pay my bill on time that AT&T would text me more to prompt me to pay. But overall I am satisfied with the AT&T texting service. It’s not intrusive and it keeps me adequately informed.

Comcast is a bit late to this game and many other carriers and other types of companies already use texting to connect to customers. When I moved to Florida I found that a lot of businesses here use text messages. For example, I bought some furniture from Haverty’s who texted me throughout the delivery process. They let me know when my furniture was delivered to their warehouse, and they texted me several times to coordinate delivery. Using texts they were able to pin down the time of my delivery to about an hour. I think a lot of people would be happy if Comcast technicians could do the same thing.

So texting can be a great tool when used correctly. A lot of people don’t want to talk to customer service reps and a two-way texting service provides a great alternative. With AT&T I can do such things as make queries about my bill and I don’t have to call or be at a computer.

But there is a darker side to texting because the large wireless carriers control the market very tightly. SMS texting as we know it got introduced in cellphones in the late 90s. But, like the Internet, texting is not covered by Title II regulation and so there are very few FCC rules that apply to text. The FCC has a few rules, such as mandating that texting can’t interfere with voice calling, but otherwise the product is largely controlled by the big carriers like AT&T and Verizon.

Since Comcast is not a wireless carrier they must buy texts wholesale from one of these large wireless carriers. Interestingly, those carriers are quite strict about how texting is used. For example, they limit the number of times per month that texting can be used to send a sales message to a given customer. I assume that the carriers are careful about this because they don’t want a lot of customer complaints at the FCC, which might result in becoming regulated by Title II.

The big carriers have a good reason to be cautious, because they make a fortune on texting. It costs almost nothing to send a text, as in a very tiny fraction of a penny (with many zeros before the first digit). The bandwidth used for a text message is tiny, and the date path being used has to be there any way since it is a control channel for some of the functions of cellular calls. The texts they have been selling for years for ten cents has to be the most obscenely profitable product in the world.

But the carriers often go further than just limiting the number of texts. For instance, in the past there are instances where the big carriers have blocked texts. One well-known case was when Verizon blocked text messages coming from Naral Pro-Choice America. Verizon thought the content of the texts was too controversial and graphic and blocked the group from texting. In an unregulated world Verizon is free to establish any rules they want for the texting service they sell, and so they are free to block Naral. But I find it disturbing when Verizon gets in the censorship business while using spectrum they got from the government.

This is a good example of what might happen to the Internet without any net neutrality rules. In the texting world the carriers have become judge, jury and executioner and they control texting with an iron fist. One can imagine over time that the major ISPs could do the same thing to the Internet.

Regulation by the carriers has a positive side. Verizon is actually more likely than the FCC to quickly slap Comcast’s wrist if they get carried away with the number of texts they send to a given customer. But do we really want a large company like Verizon deciding what can and cannot be done in the texting world?

Texting is directly analogous to the regulation of the Internet. Today we have no net neutrality rules since the last set are in limbo. The Internet is being controlled right now by the large carriers. I think the only thing stopping the carriers from making deals for Internet fast lanes or even worse things is that they are afraid the FCC will use that as an excuse to implement Title II regulation. But if the day comes when the carriers stop worrying about that threat, then we only have to look at the texting market to see what carrier regulation looks like. It’s not particular pretty.

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