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Friday, February 25, 2005

Calling Card Classification Confusion
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As long as we live under a outdated regulatory regime that is based on subtle and often metaphysical techno-functional distinctions, service providers will have an incentive to sit back and game the system. That is especially true when huge financial consequences turn on the regulatory distinctions. So, who can really blame AT&T for trying to avoid paying millions of dollars in universal service fees and access charges by arguing that the insertion of ad messages into its card service turn calls into an "information service" exempt from these fees?

But who can really blame the FCC for deciding, as it said in its news release, that the ads "are incidental to the underlying telecommunications service offered to the cardholder...and do not change the regulatory status of the service."

Aside from the metaphysics, what caught my eye in the FCC's news release and the commissioners' statements relates to how the agency goes about its business. Noting that AT&T has also asked the Commission to rule on the regulatory classification of two new variants of its calling card, the Commission said "that the public interest would be best served by considering the issue comprehensively rather than in a piecemeal manner." In his separate statement, Commissioner Adelstein expressed concern "that the Commission defers ruling and instead seeks comment through a NPRM on two alternative forms of calling card services."

Commissioner Adelstein has a point. Too often the FCC avoids dealing with issues, or at least delays dealing with them, by initiating yet another "comprehensive" rulemaking. There is a place, of course, in a sound adminstrative regime for "comprehensive" rulemakings. But as I argued last year in a piece for Legal Times entitled New Rules for New Tech, "in today's technologically dynamic environment, the FCC should rely more frequently on adjudicative techniques." Somewhat more reliance on a case-by-case common law-like approach, such as, for example, just determining the classification of AT&T's two new card variants, is likely to lead to less costly, more timely, and sounder decisions.

posted by Randolph May @ 9:49 AM | The FCC

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