February 3rd, 2005

Dear Congressmen Barton, Dingell
Greenwood, Stupak
Senators Stevens, Inouye

FCC Chairman and Commissioners

  • Re: Request for a Congressional Investigation of the Control of the FCC Consumer Advisory Committee by Telecommunications Business Interests.

Can you understand the charges and taxes on your phone bill? Of course not. Why hasn’t the FCC moved to fix this nationwide problem?

In 2003, Teletruth was appointed to be on the FCC Consumer Advisory Committee. Teletruth was honored to serve. Our specialty and expertise is the auditing and correcting of mistakes on residential and small business phone bills, as well as covering other areas of the phone and broadband industries for the public interest.

However, it has become clear over the course of two-years of events that this Committee is the epitome of “regulatory capture” — the telecommunications industry has been able to unduly influence events on this Committee and at the Commission, and has harmed the public interest. We found that the problem with phone bills is that the regulatory system has fallen to the depths of no longer serving the public’s needs.

The lofty goal of the FCC Consumer Advisory Committee is to: “…make recommendations to the Federal Communications Commission regarding consumer issues within the jurisdiction of the Commission and to facilitate the participation of consumers…. in proceedings before the Commission.”

Make Up of the Committee — Phone Companies and their Associations’ Lawyers.

This FCC Consumer Advisory Committee now has almost as many industry lawyers defending their clients, than actual consumer advocates, or, dare I say, any consumers.

For example, what are the lawyers for these companies and associations doing on a consumer advisory committee? — AT&T, BellSouth, Cingular, Verizon, MCI, Cellular Telecommunications and Internet Association, National Association of Broadcasters, Telecommunications Industry Association, and the National Cable Telecommunications Association. Many of the consumer issues are directly related to industry’s own business actions. See the full member list.

A recent Washington Post (12/8/04) column remarked: “You’d think when Chairman Michael Powell had a chance to appoint a Consumer Advisory Committee to act as something as a counterweight to industry lobbying, he wouldn’t have handed more than a third of the 35 seats over to representatives from the likes of AT&T, BellSouth, the National Association of Broadcasters and the National Cable & Telecommunications Association.”.

To make matters worse, there are also members on the Committee, such as Alliance for Public Technology, (APT) who are essentially funded by the Bell phone companies to look like they represent consumer interests, but are more to help the companies’ agenda. APT’s sponsors are BellSouth, SBC, SBC California, and Verizon. (This represents virtually all of the former Bells — 8 different merged firms, from Ameritech, Southwestern Bell, Pac Bell and SNET to Bell Atlantic, NYNEX and GTE.) This group and others are directly tied to Issue Dynamics, the major architect of the Bell companies’ political skunk works, designed to create the illusion of ‘grass roots’, but instead are created ‘astro-turf’ groups, directly supporting the phone companies’ policies.

The Harm to All “Truth-in-Billing”

In a deregulated marketplace, the phone bill has become a joke on the customer. Everyone reading this document knows that phone bills are still unreadable. (There is plenty of data to support this claim.). And unfortunately, the miscalculations of taxes, missing small business discounts, and overcharging on services that were never ordered are also common, hidden by unreadable bills, and thus “truth-in-billing” violations.

To make the point clear, can you spot the mistakes on this SBC California phone bill, this Verizon, New Jersey phone bill, or the truth-in-billing errors on this Verizon New York bill?

Teletruth’s expertise has been focused on the America’s wireline and wireless phone bills. In 2003, Teletruth’s phone bill survey data was used to help initiate two class action suits. The first was settled. It found 50,000 missing small business discounts of Verizon customers in New Jersey. And in 2004, Teletruth received a grant from the California Consumer Protection Fund to study phone bills in San Diego, California with UCAN, a respected consumer advocacy group.

However, the results of the Committee has been to close down the entire truth-in-billing issue and ignore our attempts to fully discuss these topics and create solutions. Teletruth was prepared to present data from our research, based on hundreds of phone bills that demonstrated clear issues that need immediate attention. We were bumped from presenting our findings on the FCC Truth-in-billing panel to the full Committee in June 2004. Also, our suggestion that the FCC do a survey of customers to see exactly how bad the problems are for customers, was denied.

NASUCA, the National Association of State Utility Consumer Advocates and Committee board member also has a current filing at the FCC pertaining to a host or essentially unwarranted charges being added to customers’ wireline and wireless phone bills throughout the US. This has also been ignored.

However, the industry finds nothing wrong with their bills. Robin Tuttle, Associate Counsel, United States Telephone Association stated, “USTA does believe that the guidelines are working well. Our members, which are primarily wire line local exchange carriers, are not experiencing many billing problems. But when isolated complaints do arise, they are handled”. Michael Altschul, Senior Vice President and General Counsel, Cellular Telecommunications and Internet Association (CTIA) stated, “…we believe that the guidelines and competition have ensured that consumers have the information they need, both to make informed choices and to understand the elements of their bill.”

The Final Output of the Committee: Deadlocked Without Consumer Protections.

The phone companies never would back any investigation of their own products. And their opinions, not the consumers, were the final determination. Because of the industry players within this group, the current report pertaining to Truth-in-Billing concludes:

  • “The Working Group worked tirelessly to develop joint recommendations that would address both industry and consumer agencies’ perspective on truth-in-billing issues. Although healthy debates took place, the Working Group could not reach a consensus.” (Emphasis added)

After two years, the committee’s emphasis has been to say. “Let customers beware.

Phone bills are OK and we don’t have to do anything about it.”

This wasn’t the only working group that was unable to come to a consensus. The “Competition Working Group” who’s mandate is to “…consider recommendations to the FCC regarding policies that would best continue the opportunities for consumers to benefit from competition in telecommunications”, also couldn’t reach a consensus.

And there are important and very current decisions, such the wholesale rates (known as “UNE”) to allow competitors to use the customer funded networks, and provisions of the Triennial Review Order that impact every customer who uses a competitive service.

Instead, this competition group “…was unable to come to agreement on both the introductory statement and the list of general principles.” As the Washington Post put it: “…the working group on competition threw in the towel completely after failing to come up with definition for ‘competitive market’.”

We are not alone in our grievance about how the FCC committees select members. In December, 2004, the GAO released a report, GAO-05-36, titled “Federal Advisory Committees Follow Requirements, but FCC Should Improve Its Process for Appointing Committee Members.” The report states: “FCC’s Chairman and one commissioner stated that the committees are adequately balanced while two others stated the committees are not always inclusive of varied interests.” The report continues “Of the trade and interest groups we contacted, five said they believed the advisory committees had balanced membership. …However, six of the trade group representatives we contacted did not believe the advisory committees were balanced. Of those with this view, four said that the committees had too many industry representatives, one said the committees did not have enough consumer representation, and one said the committees lacked geographical and ethnic diversity.”

We also need to point out that while the GAO made every effort to poll the current members, what was not asked was the primary question: How many of these members are independent of some company or industry trade group and actually puts the consumer first. It is, after all, the “Consumer” Advisory Committee.

We would also like to make something clear — We are proud to be appointed to this Committee and we have a great deal of respect for most of the members, who are hard working people, donating their time to make consumer issues a priority at the FCC.

However, this process has been a serious disappointment to us. But more to the point, this process is a slap in the face of the public’s interest to have their voices heard at the FCC. Therefore, we are asking that the situation be investigated by Congress to see what changes need to be made, not only in the boards’ composition, but the protection of customers from bad practices of the telecommunications industry.

Maybe the Washington Post is right: “Next time, Powell might consider this radical idea: Appoint 35 ordinary consumers with no hidden agendas and no axes to grind.”

With the departure of Michael Powell from the FCC, there is now a new opportunity that this issue of proper representation of consumers be addressed and correctly handled.

We also need to point out that Commissioner Copps has championed the truth-in-billing issues in his “Always On” campaign. As Copps wrote: “We have a choice at the FCC. We can let consumers slide deeper into confusion and be on the receiving end of exponentially more complaints—we had nearly 7000 such complaints in the last quarter (of 2003) alone—or we can explore solutions.” He also stated “The Commission has not merely the directive to consider the public interest in its decisions—it has the statutory obligation, pursuant to the Communications Act, to take only actions that are in the public interest.”

We believe that the FCC needs to have a Consumer Advisory Committee that is unfettered by industry interests — The simple proof? Ask anyone in America to explain the taxes and surcharges on their phone bill.

Yours Truly,

Tom Allibone, Member, FCC CAC, Director of Audits, Teletruth

Bruce Kushnick, Alternate, FCC CAC, Chairman, Teletruth