Text Messaging Ruling Seen Headed to 3-1 Approval at FCC; California Vote Affected

What the FCC decides will complicate the California Public Utilities Commission vote the next day on a proposed decision to affirm text messaging is subject to state USF and other "public purpose program" surcharges (see 1812040017), experts said. The FCC didn't comment.

In a letter Wednesday, public interest and other groups led by Public Knowledge asked the FCC to defer action until the agency first examines the appropriate treatment of SMS revenue, “including whether SMS revenues could be included in USF.” They warned the FCC could otherwise harm deployment tied to Lifeline and other USF programs. They note closing the digital divide is a top priority of Chairman Ajit Pai.

“Under the Communications Act, only Title II telecommunications services automatically contribute to the funding of Universal Service Fund programs,” the groups said in docket 08-7. “Definitively classifying texting as an information service removes these revenues from the potential contribution pool. This classification order will not only miss an important and desperately needed opportunity to expand USF funding, it will actually reduce funding by some unknown amount.” The Center for Democracy and Technology, Communications Workers of America, Consumer Reports, Electronic Frontier Foundation, Open Technology Institute and United Church of Christ Office of Communications were among other signers.

Related issues have been before the FCC for more than a decade. In 2007, PK and others raised concerns carriers were discriminating against some groups by declining to issue them short codes needed for messaging-based campaigns. Complaints grew out of Verizon’s initial refusal to issue a short code to NARAL Pro-Choice America, which sought to keep supporters up-to-date via texts.

CTIA defended the FCC approach, picking up on arguments made by Pai. The spam rate for text messages is estimated at 2.8 percent, versus more than 50 percent for email, Pai blogged two weeks ago. “That’s not by accident," he said. "Today’s wireless messaging providers apply filtering to prevent large volumes of unwanted messages from ever reaching your phone.”

The ruling is “consistent with the views of state attorneys general, public safety, and local government representatives who have asked the Commission to ensure that wireless messaging services do not suffer the same fate as voice, which has overwhelmed consumers with billions of unwanted robocalls,” CTIA said. The National Organization of Black County Officials endorsed the draft: “There are strong public policy reasons for spam filter technology to ensure we are only getting the messages we wish to receive.”

California Questions

If the FCC decides texting is an information service, the CPUC might have to rethink its legal justification for a proposal at its Dec. 13 meeting to assess fees on the service.

Assessing state USF and other fees on text messaging revenue isn’t inconsistent “with the FCC’s light touch regime for information services,” said the CPUC proposed decision. “The Restoring Internet Freedom Order recategorized broadband as an ‘information service’ rather than a ‘telecommunications service’ under the Act, as amended, but was silent with regard to classifying text messaging services. Similarly, the Pulver Order declared that pulver.com’s Free World Dialup offering was an unregulated ‘information service’ under the Act, as amended, but was silent on the categorization of text messaging services.”

The FCC deciding classification before California commissioners vote is problematic for the CPUC, said Tellus Venture Associates President Steve Blum, a California consultant for local governments. The CPUC proposal bases authority “on the FCC's prior silence,” but when “the FCC formally breaks that silence, and puts text messages into the same regulatory bucket as broadband service, that authority goes away,” he emailed. “The CPUC wants to top up its universal service program funds, but those are for common carrier -- Title II -- services, not information -- Title I -- services.” The CPUC didn’t comment Wednesday.

“The CPUC came out with this proposed decision, and then all of a sudden” the FCC decided “after a 10-year wait to finally classify text messaging,” said Greenlining Institute Senior Legal Counsel-Telecom Paul Goodman in an interview. Greenlining, The Utility Reform Network (TURN) and the Center for Accessible Technology see text messaging as a telecom service but say the CPUC could assess fees regardless (see 1705150040).

Goodman gave equal odds of the CPUC moving ahead with the vote versus holding the item until the next meeting. The FCC order doesn’t mean the end of the state proceeding, but it might require another round of briefings and new legal justifications, he said. The FCC has never said explicitly surcharges can’t be assessed to texting or information services, and there has historically been more leeway for fees for public “safety net” programs like Lifeline, he said.

California commissioners shouldn’t wait to act “based solely on a ‘draft’ order that could change or not get voted out at all,” emailed TURN Managing Director-San Diego Christine Mailloux. Impact of the FCC ruling can be considered in the second phase of the CPUC proceeding, she said. The FCC’s draft declaratory ruling “does not directly address the issue of universal service surcharges on text messaging or even state authority over texting as an information” service, Mailloux said.