Pai Continues Radical Deregulation Agenda. Next On The Menu — SMS Texting and Short Codes

In December 2007, Public Knowledge (joined by several other public interest groups] filed a Petition For Declaratory Ruling asking the Federal Communications Commission (FCC) to clarify that both SMS Text Messaging and short codes are “Title II” telecommunications services. Put another way, we asked the FCC to reaffirm the basic statutory language that if you use telephones and the telephone network to send information from one telephone number to another, it meets the definition of “telecommunications service.” (47 U.S.C. 153(53)) We did this because earlier in 2007 Verizon had blocked NARAL from using its short code for political action alerts. While we thought there might be some question about short codes, it seemed pretty obvious from reading the statute that when you send “information between or among points of the users choosing, without change in the form or content as sent and received” (definition of “telecommunications”), over the phone network, using phone numbers that it is a “telecommunications service.”

 

Sigh.

 

On the anniversary of the repeal of net neutrality, FCC Chair Ajit Pai now proposes another goodie for carriers – classifying both short codes and text messages as Title I “information service” rather than a Title II telecommunications service. As this is even more ridiculous than last year’s reclassification of broadband as Title I, the draft Order relies primarily on the false claim that classifying text messaging as Title I is an anti-robocall measure. As we at PK pointed out a bunch of times when the wireless carriers first raised this argument back in 2008 – this is utter nonsense. Email, the archetypal Title I information service, is (as Pai himself pointed out over here) chock full of spam. Furthermore, as Pai pointed out last month, the rise in robocalls to mobile phones has nothing to do with regulatory classification and is primarily due to the carriers not implementing existing technical fixes. (And, as the Wall St J explained in this article, robocallers have figured out how to get paid just for connecting to a live number whether or not you answer, which involves a kind of arbitrage that does not work for text messages.)

 

As if that were not enough, the FCC issued a declaratory ruling in 2015, reaffirmed in 2016, that carriers may block unwanted calls or texts despite being Title II common carriers. There is absolutely nothing, nada, zip, zero, that classifying text messages as Title II does that makes it harder to combat spam. By contrast, Title II does prevent a bunch of blocking of wanted text messages as an anticompetitive conduct which we have already seen (and which is occurring fairly regularly on a daily basis, based on the record in the relevant FCC proceeding (08-7). This includes blocking immigrants rights groups, blocking health alerts, blocking information about legal medical marijuana, and blocking competing services. We should therefore treat the claims by industry and the FCC that only by classifying text messaging as “information services” can we save consumers from a rising tide of spam for what they are – self-serving nonsense designed to justify stripping away the few remaining enforceable consumer rights.

 

Once again, beyond the obvious free expression concerns and competition concerns, playing cutesy games with regulatory definitions will have a bunch of unintended consequences that the draft order either shrugs off or fails to consider. Notably:

 

1. Classifying texting as Title I will take revenue away from the Universal Service Fund (USF). This will further undermine funds to support rural broadband.

 

2. Classifying texting as Title I disrupts the current automatic roaming framework established by the FCC in 2007.

 

3. Classifying texting as Title I may, ironically, take it out of the jurisdiction of the Robocall statute (Telephone Consumer Protection Act (TCPA) of 1991).

 

4. Trashing whatever consumer protections, we have for text messages, and taking one more step to total administrative repeal of Title II completely. Which sounds like fun if you are a carrier but leaves us operating without a safety net for our critical communications infrastructure (as I’ve been writing about for almost ten years).

 

I unpack all of this below.

 

 

A Bit of Background To Understand What’s Going On.

 

Since Chairman Pai can’t simply come out and say “I plan to do yet another favor for carriers,” and the go to excuse about “deregulating to encourage investment” does not even pass the laugh test, Pai needs to make this about robocalls. That means providing a somewhat disingenuous and incomplete history. With the sort of lazy writing we associate with sequels, Pai once again pretends that history begins in 2015 with a Petition to classify texting as Title II by a company called Twilio (Petition here and here, request for expedited treatment here.) I’ll let Twilio defend itself, but suffice it to say that Pai’s effort to make Twilio into a nefarious spamming villain is about as accurate as the claim that this is about robocalls.

 

Our story actually starts back in 2007, when Verizon refused to honor NARAL’s short code and thus blocked NARAL from sending out political action alerts.

 

Wait, What Are Short Codes Again? And How Is SMS Texting Different from What I Do on WhatsAp?

 

You can find background on SMS text messaging and what are short codes from this two pager and this video we made back when we were first pushing this issue about ten years ago. For purposes of understanding the FCC draft order, SMS text messaging is specifically a form of text messaging that uses phone numbers and the phone network to send a short text message (although these days it can have links or other types of media attached or embedded). This is important from a regulatory classification because this makes SMS texting “interconnected” with the “public switched network” (PSN). As some of you may recall from the net neutrality fight, for a mobile service to be regulated as telecommunications it must meet the definition of telecommunications in 47 U.S.C. 153(53) and be interconnected with the PSN in accordance with the definition of “commercial mobile radio service” (CMRS) in 47 U.S.C. 332. “Short codes” are the 5-digit or 6-digit numbers that can substitute for a phone number, usually used by people trying to send and receive large numbers of text messages. Examples include charity and disaster relief organizations that use “text-to-donate” programs or TV shows like American Idol that let viewers vote.

 

Unlike phone numbers, you get short codes from CTIA, the wireless carrier trade association. As detailed in this court filing, getting a short code is insanely time consuming and expensive. But even when one has a short code, that doesn’t mean that all mobile carriers will acknowledge the short code. A short code holder must go to each carrier and complete their application process. Which brings us back to Verizon and NARAL in 2007.

 

OK, Back To The History.

 

NARAL completed the process of getting a short code and took it to the carriers to get the carriers to honor it. Someone at Verizon, however, decided that reproductive rights were too “controversial” to support. This Verizon short code approval person informed NARAL that their proposed use (communicating with their members about reproductive rights and calls to political action) violated their texting policy and that Verizon would not honor NARAL’s short code. NARAL, being a big time political organization, did not take this quietly. A story promptly appeared in the New York Times, and within 24 hours of publication Verizon had reversed its decision, publicly apologized, and promised to make changes to prevent this sort of thing from happening again. (If this sounds familiar, it’s because it bears a remarkable resemblance to what happened with Verizon’s throttling California fire fighters. That’s the problem with letting companies make their own rules on blocking and throttling.)

 

As always, industry was like “look, problem solved; nothing to see here, move along.” But while this worked for NARAL, it does not work for speakers too small to attract their own story in the New York Times (or similar news outlet). Public Knowledge, joined by a number of other public interest organizations, filed a Petition in December 2007 asking the FCC to declare that SMS Text messaging and short code use were Title II telecommunications services, or to use other authority to prevent carriers from blocking content. The FCC put the Petition out for public comment in January 2008, we had a comment cycle, and then we waited. And waited . . .

 

Why Did Things Take So Long?

 

A couple of things delayed this. The big thing is that this was always in the shadow of net neutrality and the question of how to classify broadband services. The FCC Public Notice on our Texting Petition was issued the same day as the Public Notice on the complaint against Comcast for blocking Bittorrent. So the FCC focused on the Comcast/Bittorrent complaint and the whole net neutrality thing and put this on the back burner. By the time the FCC resolved Comcast/Bittorrent, we were at the end of the Bush Administration and work stopped on most everything except the DTV Transition. Then we had to wait until Genachowski was appointed the new Chairman of the FCC in 2009. As folks may recall, Genachowski was not known for his embrace of controversial issues generally or Title II specifically.

 

We tried to push the FCC to act on the Texting Petition for several years. We had incidents where Sprint threatened to pull the plug on Catholic Services “text-to-donate” relief program for Haiti after the earthquake, then backtracked when that made the news. The Catholic Services/Haiti Relief fight illustrated one of the big problems with how carriers control short codes. Because Catholic Services wanted to circumvent the $40 cap imposed by carriers at the time (carriers require those using texts for commercial transactions to use their billing system, hence the cap), Sprint threatened to pull the plug. (You can read details as we told the FCC here and here.) Similar incidents kept popping up, such as the refusal of some carriers to honor the short code for “Dreamer” advocates. We got lots of support from a fairly diverse group of civil rights groups, religious groups and other non-profits. But the Genachowski FCC, which had a well-known aversion to action generally and Title II specifically, remained unmoved.

 

Things picked up again in 2014-15 when, once again, net neutrality sucked up all the air in Telecom Land. We and other supporters of Title II and net neutrality pointed out that the experience with text messaging, which included multiple and ongoing issues of blocking and restrictions on innovation, demonstrated what would happen without a net neutrality rule for broadband. This brought attention back to text messaging, and a footnote in the FCC’s 2015 Net Neutrality Order promised to resolve the pending status of text messaging and short codes real soon now. That prompted Twilio to file its own Petition, prompting a bunch of other businesses and competing carriers to explain how the ongoing situation was shafting them and consumers generally.

 

Wait, I Haven’t Heard About Anything Bad Happening?

 

This is exactly why the whole “backlash will keep companies from doing anything awful” logic. It works great, except when it doesn’t. Most people have never heard of Twilio, or InBox Health, or CareMessage. So when they run into problems, they don’t get stories in the NYT and they don’t get their problems solved. Consumers who sign up for services like these and experience problems with getting text messages they actually want have no idea why the service stopped working. This is why even large companies that are dependent on text messaging and short codes like Zillow and FourSquare support classifying SMS and short codes as Title II telecommunications.

 

If you read the record, you will find that blocking comes in several flavors. By far the most common is “you look like spam and we don’t have to care if we get it wrong so sucks to be you.” But then you get more suspicious problems, like those reported by Textinteractions.com.

 

According to this ex parte, after Textinteractions filed comments in support of Twilio, they began to experience increased problems. Then their short code stopped working entirely on Verizon. When they reported the issue to tech support, they had service restored. When asked why they had been targeted as potential spam, VZ replied “The originating MDN was blocked for spam at the MMS carrier. This block has since been removed, but a spam block can be instituted again, based on message volume. The persons involved may wish to investigate Verizon Messaging.” (emphasis added).

 

Twilio reported a significant increase in blocking lawful messages since the FCC repealed net neutrality (almost as if carriers were emboldened by this signal from the regulator) and that “Carriers have confirmed that these messages are being blocked in an effort to arbitrarily force certain messages (i.e. any message an individual carrier deems ‘application to person’ or ‘A2P’ onto a CTIA common short code.” Twilio notes that the financial incentive for this is a matter of record, as 40% of CTIA’s 2015 revenue came from leasing and managing short codes.

 

Ajit Pai, of course, is unmoved by such record evidence. Unsurprisingly, the draft order deals with them with a dismissive wave. ‘What? Carriers engaging in anticompetitive behavior, or just screwing up because they can? Preposterous!’ is the basic gist of the order. Since it is impossible for carriers to behave badly without losing customers to all that competition out there, either the blocking isn’t happening or customers must want the blocking. Q.E.D.

 

This is why, in the words of marketers having nothing whatsoever to do with the FCC or this proceeding, short codes are an expensive pain in the rear end to get and use. But the advantage of an oligopoly – at least to the oligopolists — is there aren’t a lot of alternatives.

 

Under Title II, carriers could not (at least, not legally) engage in this sort of blocking and all around unjust and unreasonable behavior (to quote 47 U.S.C. 201(b)). Under Title I, carriers can do whatever the heck they like.

 

Hold On, You Said Above That The FCC Was Reclassifying Text Messaging As An information Service. What Was It Before? If It Was An Information Service, How Did It Get Into The Universal Service Fund? If it was Title II, how did carriers get away with all this bad behavior?

 

An excellent question, which illustrates why my blog posts tend to go on for so long. Prior to the Telecommunications Act of 1996, the Communications Act did not define “telecommunications” or “telecommunications service.” The FCC relied on Section 201 of the Communications Act, which talks about “common carriers,” and its decades long history interpreting Title II and Section 201. In particular, the FCC relied on a case called National Association of Regulatory Commissioners v. FCC, aka NARUC I, which sets out the definition of a telecommunications common carrier for FCC purposes. In 1993, Congress found that the FCC was getting very confusing and “inconsistent” outcomes for emerging wireless services, so the 1993 Omnibus Reconcilliation Act amended Section 332 to define “commercial mobile services” as “interconnected with the public switched network,” and left it to the FCC to define what that means. In 1994, the FCC determined that any mobile service that can reach any phone number (assuming the receiver has the right customer premise equipment (CPE)) is “interconnected” and CMRS. Since, as the FCC acknowledges in a footnote, it found in 1994 that systems that “store and forward” technology (like SMS) are “interconnected,” everyone pretty much assumed SMS texting (although maybe not short codes when those were invented in the early 00s) was a Title II service and CMRS.

 

Then the FCC started to play fun games with definitions, and made classification as Title I the short cut to total deregulation. Since the FCC never actually said “SMS is CMRS,” the status was “indeterminate.” The FCC decided in 2003 that Text Messages were “calls” under the TCPA without explaining how that was permissible if SMS were an information service. And, like with Voice Over IP (VOIP), the FCC has pretty much treated SMS as a telecommunications service without actually saying officially it was a telecommunications service. This is why in 2007 the FCC included SMS with voice in its mandatory roaming order under Title II.

 

This is why, as the Universal Service Administration Corporation (USAC) explained to the FCC in 2011, carriers treated revenue from text messaging inconsistently. Some carriers included text messaging revenue as “telecommunications service” revenue, and therefore include this revenue in the annual USF contribution assessment. Others did not. In 2011, USAC asked the FCC to resolve the question. You can see our comments in response to the FCC’s public notice on that request from USAC here. Unsurprisingly, the FCC has still not resolved the question, and doesn’t even address this issue in the draft Order.

 

Is This Why You Say This Could Blow Up A Whole Bunch of Stuff?

 

Yes. The Communications Act rests on a foundation that classifies things by what they do, Title II for telecommunications, Title III for wireless services (including broadcasting) and Title VI for cable. Title I is just the introductory section. If we get rid of the idea of “ancillary authority” (which both the courts and the current FCC have been doing), then you undermine the essential foundation. (If you’re curious about ancillary authority (sometimes referred to as “Title I” authority), you can find more background here and here. Suffice it to say the law on ancillary authority is now sufficiently confused that opponents of it say it lets the FCC do virtually anything, whereas most of the rest of us now consider it practically a dead letter. For purposes of our conversation, think of it as a magic chant that lets opponents of Title II classification claim that you can get all the good stuff without any of the nasty, awful, crushing, My Little Pony devouring regulation of Title II. Like the promise by Brexiteers that you can get all the good stuff from being in the EU without actually being in the EU, you should treat this skeptically.)

 

Basically, the very complex system of rules and obligations that make sure that our critical communications infrastructure actually works is like a big old regulatory game of Jenga, the game where you see how many bricks you can pull out before the whole thing collapses. In the beginning, it’s fine. You can pull out a whole lot of bricks and everything looks stable. Then you pull out one more brick and – boom! – a whole bunch of bricks come tumbling down.

 

The FCC has a whole bunch of orders in place that relate to treatment of text messages that kinda sorta look a lot like Title II, where the FCC has generally acted like it can totally do what it wants and relied on carriers and consumers both not wanting to push their luck and finding out the ambiguity goes the wrong way. The decision will, in its own words, end that uncertainty. As always, rather than actually grapple with any of these legal issues and uncertainties Pai either ignores them entirely (as with the USF funding question) or airily dismisses them. I haven’t gone through all the implications for every FCC order (such as the NextGen 911 stuff). But here is where I talk about my quicky list from up top.

 

1. Takes a Bite Out of USF Funding. USAC has not said how many carriers treat SMS texting revenue as telecommunications, and therefore how much money will stop flowing in to USF to fund rural broadband, so it’s hard to assess how big a bite this will be. Certainly the opposite finding, that SMS is a Title II service, would have been a major boost to USF funding. So it’s not just the actual dollars lost, but the missed opportunity to provide for an increasingly shrinking fund as well. So much for Pai being the friend to rural broadband.

 

2. Potentially disrupts the existing roaming framework. Back in 2007, the FCC reclassified voice and text message roaming as a Title II service and required carriers to offer it to each other on just and reasonable rates (you can read about that over here). Technically, the FCC 2007 Order did not classify SMS as Title II, but said they would treat SMS as Title II either under Title II authority or ancillary authority.

 

So what’s the problem? Between 2007 and now the D.C. Circuit decided a case on data roaming and called Cellco Partnership, LLC v. FCC. Under that case (and further reinforced by the 2014 net neutrality case, Verizon v. FCC), you can’t treat a non-Title II service like a Title II service, which is what the FCC did for text messaging in the 2007 Roaming Order. Needless to say, this is another one of those loose ends the draft text messaging classification order does not bother to address.

 

Is this a big deal? Got me. It’s only a problem if someone challenges it. Since the primary beneficiaries of classifying text messages as Title I are the carrier oligopoly, you would think they would behave. Also, I have no idea if text message roaming is an issue. It’s just another Jenga brick yanked out of the structure creating another point of uncertainty.

 

3. Possibly Takes Texts Out of The TCPA. As I think I mentioned a couple of thousand words ago, the Communications Act of 1934 did not have a formal definition of “telecommunications” or “telecommunications service.” So when Congress passed the Telephone Consumer Protection Act of 1991, aka the relevant robocall statute, Congress did not provide any definition for things like “telephone call.” It merely specified that it was amending Title II by adding the new Section 227. When the FCC updated its rules in 2003 to include robo-texts as telephone calls, it did the same sort of hand waving around “maybe it is Title II, maybe it isn’t, but Congress probably wanted us to do it.”

 

Once again, does that still fly when text messages are definitively Title I? Once again, the draft Order does not worry about this possibility. To the extent it discusses its previous treatment of text messaging, it is to explain that simply because the FCC defined text messaging as a “phone call” for Section 227 of Title II, that doesn’t mean text messaging is actually Title II. Sure, back in 2003, the FCC once again dodged the question. But there is a difference between saying “maybe it is, maybe it isn’t” and definitively saying “no, it isn’t.” And frankly, I’m having a tough time reconciling the FCC’s unexplained expansive definition of “telephone calls” in Section 227 to include text messages after now-Justice Brett Kavanaugh provided such a narrow interpretation of the FCC’s authority to interpret Section 227 in Bais Yaakov of Spring Valley v. FCC.  But the FCC pretty much counts on nobody challenging the pro-consumer protection parts of things like TCPA because the big carriers know better and consumers would rather live with the fiction than see SMS text messages taken out of the TCPA. Maybe it’ll work again. But it’s one more brick pulled out of the Jenga stack.

 

4. Eliminating any consumer protections for text messages and continuing to effectively repeal the Communications Act through fun reclassification games. Of course, we shouldn’t lose sight of Pai’s real objective here – the complete elimination of the FCC’s role as a consumer protection agency (with the exception of dealing with robocalls, apparently) and the general administrative repeal of the core of the Communications Act through fun games with reclassification. As noted last year in response to the broadband reclassification order, and demonstrated here once again, Pai has an approach that makes it virtually impossible to ever classify a service ever again as Title II telecommunications. Start with the definition of “information service,” find some way to describe it in ways that fit the definition of “information service,” then conclude that because “information service” and “telecommunications service” are mutually exclusive, you don’t need to determine if the service actually fits the definition of “telecommunications.”

As this is already way too long, I will save the details on why this is “legal gobbledygook” (to quote Senior Judge Edwards in his dissent in Educause v FCC). The reality is that the FCC is once again ringing the dinner bell for carriers to come and chow down at consumer expense. And since traditional TDM based copper service is being replaced with various forms of voice over IP, we can expect Pai to throw another holiday feast for his carrier friends next year at consumer expense. As always, Santa Pai (as seen in this video here) will promise that everything will work out just fine.

 

Until, of course, it doesn’t. At which point we discover if Pai has pulled out enough Jenga blocks to bring down the whole system.