Industry Says No to FTC Control Over Common Carriers

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The telecommunications industry argued yesterday against a proposal to give the Federal Trade Commission's authority to common carriers, a move that would address a frequent criticism of the proposed national do-not-call list.


Telecommunications carriers should stay under the authority of the Federal Communications Commission, which has long regulated the industry, said Lawrence Sarjeant, vice president of law with the United States Telecom Association. Sarjeant and others spoke before the consumer affairs subcommittee of the Senate Commerce, Science and Transportation Committee in a hearing concerning the ongoing role of the FTC.


The issue is critical to the national DNC list debate because the FTC lacks jurisdiction over common carriers, as well as insurance providers and political calls, and thus cannot subject them to the proposed list. Critics of the national DNC registry often point out that because of these exemptions some of the heaviest users of outbound telemarketing will be beyond the list's reach.


Sarjeant said he rejected the argument put forth at the hearing by the FTC that because of the changing nature of the telecommunications market, the FCC was no longer able to adequately regulate the industry. Opening telecom operators to FTC regulation would create duplicative and even conflicting rules and leave the industry confused as to which agency holds sway, Sarjeant said.


The industry's exemption from FTC authority made sense when telecommunications was a monopoly that offered only one service, FTC commissioner Sheila Anthony said. Deregulation, competition, and the introduction of Internet access and other new products by carriers have created a new market with an increased danger of consumer abuse.


"The exemption has outlived its purpose," Anthony said. "Consumers are being harmed."


As presently proposed, the national DNC list would affect approximately 80 percent of the users of outbound telemarketing, FTC chairman Timothy Muris told senators at the hearing. The FTC is optimistic that the FCC will adopt its proposed DNC rules and expand the list's reach, Muris said.


The Direct Marketing Association was represented at the hearing by president/CEO H. Robert Wienzten, who reiterated its stance that the FTC's proposal for a national DNC list was unnecessary given that the DMA maintains a private list of its own, the Telephone Preference Service. Wientzen questioned whether the FTC had the authority to create a national DNC list and said the list would interfere with legitimate marketing activities and commercial speech.


Senators also heard testimony from representatives of charities that would be affected by the national DNC list. As currently proposed, the list would affect charities who use professional telemarketers for fund raising, but not those who do their telemarketing in-house.


About two-thirds of charities depend on professional telemarketers for fund raising, and subjecting them to a national DNC list could deal a "death blow" to many charities, said Dennis Alldridge, president of the Special Olympics of Wisconsin, representing the Non-Profit and Charitable Coalition. Alldridge said he found it ironic that consumers seeking to rid themselves of commercial telemarketing calls would shut out charity calls, but still receive solicitations from common carriers, insurers and politicians.


However, supporters of the national DNC list said the extension of the FTC's jurisdiction to charities, made possible by the passage of the USA PATRIOT Act, is welcome.


"A national do-not-call list would supply consumers with a sense of comfort along with a return of control over their telephones," said Charlie Mendoza, member of the board of directors for AARP, a national organization for seniors.


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