Telecom Law Monitor : Washington D.C. Telecom Lawyer & Attorney : Kelley Drye & Warren Law Firm : New York, Chicago, Connecticut, New Jersey, Brussels

According to FierceWireless and other news sources, the wireless industry announced this morning an agreement with the FCC and consumer groups to provide free text alerts to consumers before they exceed their plan limits on voice minutes, text messages, data usage or international roaming.  The press release is available on the CTIA website here.  A good summary of the agreement is available here. 

Not surprisingly, the FCC Commissioners have praised the industry for these new "voluntary" measures.  Statements from Chairman Genachowski, and Commissioners Copps and Clyburn have already been released. 

This agreement likely will allow the FCC to close its "bill shock" rulemaking proceeding without adopting formal rules.  The new Guidelines will have to be reviewed carefully, however, particularly since Commissioner Clyburn's statement asserts that the guidelines contain a mechanism to assist the FCC's enforcement of them.  That sounds more like a mandate than voluntary guidelines. 

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Once again, USAC and the federal Universal Service Fund are driving fundamental classification questions regarding telecom services.  In the latest example, USAC has requested the FCC's guidance on how to treat text messaging services for universal service purposes.  Several parties have tried before to have the FCC opine on the classification of text messaging services, with no luck so far.  Only time will tell whether USAC's request will spur FCC action where others have failed.

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This order stands in stark contrast to the nominal CPNI settlements, odd refund provisions and low-ball forfeiture penalties we've discussed in this blog.  Today, the FCC announced an eye-popping $25 million settlement with Verizon Wireless in its investigation of Verizon's unauthorized billing of wireless data charges.  The so-called "mystery fees" investigation stemmed from allegations that Verizon Wireless was charging customers $1.99 per megabyte usage charges for data sessions that consumers did not initiate or were not aware of.  According to the FCC, many of the charges were caused by mobile applications accessing the Internet, third party-initiated data transfers and failures of Verizon's Internet access and billing.  The FCC boasts that this is its largest-ever settlement and consumer refund action. 

A few weeks ago, Verizon announced $50 million in customer credits related to the "mystery fee" charges.  At the time, the FCC confirmed it was investigating, but it withheld its powder about its own enforcement action.  Today, the FCC announced a settlement and the $25 million "voluntary payment" by Verizon Wireless.  Click here for the press release and text of the consent decree. 

The FCC highlighted the following provisions in its press release:

• $25 million voluntary contribution to the federal treasury;
• minimum $52 million in consumer refunds;
• cessation of billing for "unauthorized charges";
• revised consumer disclosures and a "data block" service option.

In addition, the consent decree contains training and compliance monitoring provisions over two years. 

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As consumers increasingly rely on mobile phones, marketers naturally are following.  Text messaging, in particular, has proven to be a popular marketing method.  It is not surprising, therefore, that we are seeing in increase in litigation over the obligations of senders and mobile carriers with respect to text messaging campaigns. 

The latest example of this trend is a complaint brought in US District Court by text broadcaster EZ Texting, Inc. against T-Mobile USA.  In the complaint, EZ Texting alleges that T-Mobile unlawfully blocked EZ Texting's "short code" (a six digit number to which consumers may direct text messages) on T-Mobile's network.  The reason, as alleged by EZ Texting, was that T-Mobile "did not approve" of an EZ Texting customer that provided information concerning the location of legal medical marijuana dispensaries in California. 

EZ Texting alleges that text messages are "calls" and that Title II's common carrier obligations apply, most notably, Section 201's prohibition on unjust and unreasonable practices and Section 202(a)'s non-discrimination requirement.  EZ Texting also seeks a temporary restraining order and a preliminary injunction.  The court set a hearing on the request for September 30.

The complaint already has garnered a fair amount of attention from others.  Public Knowledge posted on its blog about the case, arguing that the case illustrates the need for the FCC to act on Public Knowledge's 2007 Petition for Declaratory ruling seeking classification of text messaging as a Title II service.  About 75 parties filed comments or replies in response to that petition.

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While the FCC has taken an interest in mobile marketing by carriers -- most notably with investigations of carrier early termination fees and proceedings examining wireless consumer "bill shock" -- it also is helpful to remember that the mobile content providers are subject to enforcement for deceptive marketing practices.  Our colleagues at the Ad Law Access blog covered a recent settlement of a class action lawsuit by several mobile marketers.  They remind marketers to clearly and conspicuously disclose costs so that consumers know what they are obligated to pay.  Mobile service providers should ensure that their billing and collection agreements impose such an obligation on the content provider and that the carrier properly polices compliance.

Read the Ad Law Access story here. 

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It has been quiet on the FCC front as all hands seem to be focused on the upcoming National Broadband Plan.  In the meantime, I didn't want this development at the FTC to go unnoticed.  Our firm's sister blog, Adlawaccess, provided this report on the confirmation of two new Commissioners.  A statement by the FTC Chairman is available here.

With the FTC active in enforcement on prepaid card and mobile marketing matters, and with the FTC seeking an end to the "common carrier exception" to its jurisdiction, it is worth monitoring activities at the FTC. 

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Initial comments were filed last week on Club Texting's request for a declaratory ruling regarding the use of text broadcasting for marketing purposes.  Club Texting, a provider of mass texting services to marketers and other customers, asked the FCC to rule that text broadcasters enjoy the same protection from liability under the TCPA that applies to fax broadcasters.  Under this standard, a text broadcaster would not be considered a "sender' of the message unless it has a "high degree of involvement" in an illegal message or had actual notice that the transmission is illegal and failed to take steps to prevent the transmission. 

The FCC sought public comment on Club Texting's petition, but the only comment was filed by another text broadcaster.  Not surprisingly, the commenter also supported a ruling that the FCC will apply the same standard to text broadcasters that it applies to fax broadcasting.  No consumers, class action plaintiffs or public interest groups filed in response to the petition.

With such little comment, it is unlikely the FCC will rule on the petition any time soon, if at all.  This issue most likely will be addressed initially in litigation challenging a mobile marketing campaign.

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On Friday, June 19, 2009, the Ninth Circuit Court of Appeals reversed a district court decision involving a mobile marketing campaign. A key issue in the case is whether text messages are subject to the Telephone Consumer Protection Act (the "TCPA"), a law that was drafted before the advent of text messaging. Although the Ninth Circuit remanded the case so that the district court could develop more facts, the decision underscores the importance of ensuring that marketers get express consent before sending text messages to consumers. 

Background on the Case

Laci Satterfield became a registered user of Nextones in order to receive a free ring tone. During the registration process, Ms. Satterfield checked a box which read, in part: "I would like to receive promotions from Nextones affiliates and brands." On January 18, 2006, Ms. Satterfield received a text message from Simon & Schuster advertising a novel by Stephen King. Shortly thereafter, Ms. Satterfield filed a class action lawsuit alleging that Simon & Schuster's text message campaign violated the TCPA.

In June 2007, the Federal Court for the Northern District of California granted summary judgment to Simon & Schuster holding that the company did not violate the TCPA. Specifically, the court determined that the text message campaign did not violate the TCPA's prohibition against using an automatic telephone dialing system (an "ATDS") because the device used to send the messages did not fall within the statutory definition of an ATDS. Moreover, the court found that Ms. Satterfield had agreed to receive text messages when she registered for Nextones.

Ninth Circuit Opinion

On Friday, June 19, 2009, the Ninth Circuit Court of Appeals reversed the district court decision and remanded the case for further proceedings. The Ninth Circuit held that the district court had erred because (1) the text message was a "call" within the meaning of the TCPA, (2) there was a disputed issue of material fact as to whether the system Simon & Schuster used was an ATDS, and that (3) Ms. Satterfield did not consent to receive messages from Simon & Schuster because Simon & Schuster is not an affiliate or brand of Nextones.

The TCPA applies to certain types of "calls." Simon & Schuster had argued that the sending of text messages did not constitute a "call" under the TCPA. Although the district court did not rule on that point, the Ninth Circuit disagreed with Simon & Schuster's argument. The term "call" is not defined by the TCPA. However, the Federal Communications Commission has noted that the statute

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