SENATE COMMERCE COMMITTEE GIVES FTC COMMON CARRIER JURISDICTION

Removal of FTC’s exemption from common carrier was included in FTC reauthorization legislation (S-2946), which passed committee 16-7. Sen. Dorgan (D-N.D.) introduced bill late Tues. and said he would work with opponents to proposal to make appropriate changes. Several senators said such sweeping jurisdictional changes should receive more review before being moved through Senate. In July, FTC Chmn. Timothy Muris asked Senate to broaden FTC’s jurisdiction so it may investigate fraudulent advertising practices by telecom providers, which is currently under FCC’s jurisdiction (CD July 18 p3).

During markup Thurs., Dorgan said bill wouldn’t create new regulatory scheme, but instead would create “alliance” between FTC and FCC in regard to advertising practices. Dorgan said there have been many cases when FTC had to drop case because defendants used common carrier exemption to escape agency’s jurisdiction. “Fraud should never get a pass because it falls between jurisdictional gaps,” Dorgan said. However, several Republican senators raised questions about what effects such change would have. “We don’t know how many potholes are in this,” said Sen. Burns (R-Mont.), who added he believed bill would create duplicate jurisdiction. “Anytime you duplicate jurisdiction you create a state of confusion,” he said: “Nothing will get done for the consumers.” Sen. McCain (R-Ariz.), voted for bill, but also voiced questions about jurisdictional changes that he said would have to be answered. McCain wanted to know more about gaps in jurisdiction and if changing jurisdiction could change process of telecom industry merger reviews, which are currently under jurisdiction of Justice Dept. (DoJ) Sen. Allen (R-Va.) also said state PUCs have some jurisdiction over advertising and false billing and that they should be considered in debate. Senators voting against bill included: Brownback (R-Kan.), Burns, Ensign (R-Nev.), Fitzgerald (R- Ill.), Hutchison (R-Tex.). Ensign said some senators would likely place hold on bill.

FTC Dir.-Congressional Relations Anna Davis said FTC isn’t expecting House to address FTC reauthorization this session and it’s likely Senate would remove common carrier from FTC reauthorization bill. However, she said she was “delighted” issue was addressed by Senate and said she has hopes jurisdiction change can be instituted during next session. Jurisdictional change would open door for FTC to review mergers in telecom sector, she said, which is now sole domain of DoJ. However, Davis said FTC’s main focus is advertising practices within telecom, and agency likely wouldn’t try to become involved in telecom industry mergers. “Advertising is a huge component of how products are sold” in telecom industry, Dorgan said. Despite voting for bill, McCain said problems would have to be worked out if there were to be any chance of passing. Ensign said common carrier exemption would have to be removed before FTC reauthorization could pass.

In lobbying for jurisdictional changes, Davis said FTC met strong opposition from telecom companies and associations. Dan Phythyon, USTA vp-law & public policy, said: “We are encouraged by Senator Dorgan’s commitment to further discussions concerning whether there is a need for an FTC role in regulating common carrier’s marketing practices. The Federal Communications Commission already has jurisdiction in this area and is fully exercising its enforcement authority. Our concern is that expansion of the FTC’s authority would potentially bring duplicative, conflicting and costly new regulatory requirements to carriers.”