CTIA Builds Economic Case Against State Regulation of ETFs
Early termination fees (ETFs) are in general “part of the rate structure of wireless services” and shouldn’t be subject to state regulation, according to a study by former FCC Comr. Harold Furchtgott-Roth, which CTIA submitted to the Commission. CTIA is mounting a major campaign to convince the FCC that ETFs should be considered part of rates and not subject to state regulation, building on a petition seeking an expedited rulemaking the association filed a year ago. FCC Chmn. Martin is a former aide to Furchtgott-Roth.
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“Restrictions on the rate structure of wireless services, including ETFs, have few if any identifiable consumer benefits but would impose substantial costs on consumers,” the study said. “Although there may be compelling legal reasons for the Commission to adopt a specific position in this docket, there are no compelling economic or consumer reasons to reinforce or expand government limitations on the rate structure of wireless services in general and of ETFs in particular.”
Among the evidence of robust competition, Furchtgott- Roth said multiple wireless carriers “vigorously compete for customers,” that the relatively small numbers of consumer complaints about the industry “are not a reflection of limited competition” and that each carrier has multiple offerings available, including prepay and hybrid plans that don’t include ETFs. The report said “most American consumers never breach wireless contracts, never pay ETFs, and never complain about ETFs.”
The report also argued that, while they have a choice, consumers overwhelmingly opt for plans with ETFs. “The mere presence of competition disciplines firms to cater to the demands of consumers,” the report said: “If the CMRS market is as competitive as the Commission repeatedly finds, the current structure of wireless service prices with ETFs is already a competitive response to consumer preferences.”
CTIA previously made its legal case on why the FCC should hold that ETFs aren’t subject to state regulation. The new study looks instead at consumer and economic issues. CTIA is planning to set up a series of meetings with the FCC bureaus, as well as the legal advisors and the commissioners themselves to make their case, officials said.
“This is the top priority for us right now,” Chris Guttman-McCabe, CTIA vp-regulatory affairs, told us: “This goes a long way to show that there are benefits associated with ETFs that have a lot to do with the success of the industry. This provides support for why it makes sense on a policy basis.”