Sunday, March 28, 2010 - The Progress & Freedom Foundation Blog

Free Press & Public Knowledge Try to Invent Regulatory Crisis over Sprint Short Codes

John Schwartz of The New York Times called me two weeks ago and asked for comment about a potential controversy involving mobile phone provider Sprint and the charitable organization Catholic Relief Services (CRS). The facts were pretty sketchy at the time, but Schwartz told me that CRS was accusing Sprint of blocking Mobile Commons, the company that connects CRS and 100 other nonprofit organizations with text messaging networks, from getting a short code to create a charitable mobile donation program in the wake of the Haiti earthquake. Here's the basic background that appeared in Schwartz's March 24th article, "Catholic Charity and Sprint Tangle Over Texting":

[CRS] wanted to try a twist on the technology: when people sent a text message to donate, they got a reply offering to connect them via phone to the charity's call center. The group hoped that the calls could build a stronger bond with donors, and garner larger contributions as well. But just three days into the effort after the Jan. 12 earthquake, the charity got word that Sprint Nextel was demanding that the "text-to-call" effort be shut down. The charity had 40 days to abandon the feature or lose access to millions of Sprint customers. Sprint's original motivations are murky; it said that an intermediary company had failed to properly fill out a form to verify that it was dealing with a legitimate charity.

It didn't take long for the regulatory activists at Free Press and Public Knowledge to pounce and claim the Federal Communications Commission (FCC) had to intervene to save our souls from the nefarious scum at Sprint. After all, you do know that Sprint hates Haitians, right? The company obviously wanted to see Haitians starve and not receive any support from charitable organizations.

No, seriously, come on! How asinine is this storyline?!

That's why, when Schwartz called me about the issue, I felt something else had to be going on here. When he asked me for a quote for the story, here's what I said, (on the assumption that Sprint probably had some sort of system in place to ensure fraud wasn't taking place): "most people would say, I want my carrier to be doing a certain amount of policing for potentially harmful or fraudulent activities," and would hold the carrier responsible if things went wrong.

And, now that all the facts are out, we now know that Sprint had no charity-blocking machinations in mind. Indeed, as I suspected, the company (quite sensibly) has a process in place to make sure that any organization asking for the short code is legit and not a blatant scam artist. Here's how Sprint explained the situation:

We are simply asking Mobile Commons - the aggregator involved - to adhere to the same reasonable practices with which other entities involved in mobile giving adhere. Specifically, certify that the charities they work with are 501(c)3 organizations; set up a confirmation process for each short code; and, provide basic information concerning the mobile giving campaign they wish to implement. In turn, this allows us to accurately communicate this information to our wireless customers who call us seeking more detail. Taking these steps also protects our customers and assures that their donations are going where they are intended.

Makes perfect sense to me, especially in light of the unique "text-to-call" service being proposed by CRS and Mobile Commons in this case. If you were a mobile phone operator, wouldn't you want to a have a process in place to vet short code use so that your users weren't getting scammed by hucksters? (That's especially the case in our litigious society, where class-action lawsuits fly at the first whiff of potential trouble.) And as a customer, don't you hope that your provider has such safeguards in place? Basically, that's all that Sprint has done here.

But here's what I found really surprising, and that you certainly wouldn't learn if you only listened to the howling in Free Press and Public Knowledge press releases: Sprint never blocked the CRS code at all! A clearly (and legitimately) agitated John Taylor, who handles corporate communications for Sprint, notes:

There is not ONE Sprint customer who has been prevented from using the short code set up by the mobile marketing firm hired by Catholic Relief Services. That's because the short code is operable on Sprint's network. (It never was suspended and we never threatened to suspend the code.)

And here's Sprint's letter to the FCC responding to the allegations and verifying that the CRS code has been operational and will continue to be so.

Now, let's get back to the call by Free Press and Public Knowledge for regulatory intervention. They made that call to regulatory arms less than 24 hours after Schwartz's NYT article appeared. Never mind the sketchy facts, they basically said, we are going full bore forward and requesting action now! Here's what they demanded:

"The Commission has an opportunity to establish the rule of law with regard to text messaging and short codes. It can require that carriers deal fairly, and that non-profits and commercial enterprises have the necessary stability and legal protection from unjust and unreasonable discrimination to innovate and explore new ways to use this communications technology. But if the Commission once again turns a blind eye to carrier discrimination by letting the Petition continue to languish, this too will send a message to both carriers and users of short codes, and we can expect such arbitrary discrimination to continue to increase."

But the problem with this is that the carrier in question (Sprint) was dealing with the situation fairly and in a reasonable, non-discriminatory manner. The company was applying the same sensible policy in this case they they have applied across the board. And, again, they were not blocking anything at all!

In a truly audacious response to these facts, Harold Feld of Public Knowledge tries to avoid admitting that they were clearly wrong on the facts and instead spins this around to make it all Sprint's fault. In a response to John Taylor, Feld argues:

the "real story" is that Mobile Commons and CRS must put up with such ridiculous processes and arbitrary treatment at all . That you feel ill-used because the process that you developed and implemented prevented you from discovering that a customer was threatened with a shut off for a relief fund -- and that you failed to contact the customer directly after the NYT reporter alerted your company about the problem -- emphasizes the phenomenal sense of entitlement carriers have with regard to how they provision what should be a basic service no different from use of an 800 number.

Absurd. What "ridiculous processes and arbitrary treatment" are you talking about, Harold? There's none here to be found! Would Free Press and Public Knowledge prefer no process at all? Again, should any huckster calling themselves a "charity" be able to grab a short code and unwitting "donors" givers straight to their offshore account to pump individual givers' bank accounts at will? That seems like bad business to me--for both Sprint and its customers. Indeed, if Sprint didn't have some policies in place to deal with such things, policymakers would likely be up in arms about it and the FTC would potentially come calling once things went wrong. Or would you put the FCC in charge of monitoring all these things on behalf of carriers? Should the FCC have a whole wing of regulators dealing with standard business practices like fraud prevention? Seriously, why shouldn't that be handled by private carriers?

Even more outrageous is Feld's line about carriers' "phenomenal sense of entitlement." What in the hell is he talking about? The only "sense of entitlement" I can find here is the one on display at Public Knowledge and Free Press, two organizations that apparently believe that they are entitled to instantaneous FCC regulation of communications markets based on asinine and unsubstantiated conspiracy theories. Most troubling of all is the fact they couldn't even wait 24 hours to check out all the facts and see what the real story was--perhaps, by checking with Sprint! Instead, they displayed a reckless disregard for the truth in their rush to fire off a letter asking the FCC to bring down the regulatory hammer.

Shame on them both.

posted by Adam Thierer @ 12:37 PM | Communications , Generic Rant , Wireless