ACI Calls on FCC to Reject Text Messaging Regulations

The FCC is currently accepting comments on a petition that seeks the application of 1930s-style common carrier regulations on text messaging services. Today, ACI called on the FCC to reject the petition.  The following is an except of ACI’s filing with the FCC:

Comments of the American Consumer Institute

The American Consumer Institute Center for Citizen Research (ACI) is a nonprofit (501c3) educational and research institute with the mission to identify, analyze and protect the interests of consumers in selected policy and rulemaking proceedings related to information technology, health care, retail, insurance, energy and other matters.  While ACI is a participating member of the Commission’s Consumer Advisory Committee (CAC), and its Broadband and Privacy Working Groups, as well as  chairing the IP-Transition Working Group for the CAC, the following comments are solely my and ACI’s views, and do not necessarily represent the views of the CAC or its members.

In this proceeding, the Commission seeks comments on Twilio’s petition for an expedited ruling to declare messaging services to be governed by Title II regulation.  We oppose this petition and believe it is mere “rent-seeking” on the part of Twilio – an attempt to manipulate the regulatory process for its own financial benefits.  As I will discuss, the reclassification will likely reduce consumer welfare.

Discussion

Messaging is a highly competitive market and consumers routinely utilize several forms of messaging. More broadly, messaging can come in many forms – emails, short message services (SMS or text messaging) and multimedia messaging service (MMS), instant messaging, video and voice communications applications (Skype, Facetime and Viber), chatrooms, teleconferencing (including GoToMeeting), and social media applications (such as Twitter, Snapchat and Facebook Messenger).

Limiting the market only to text messaging applications available to mobile consumers does little to narrow the competitive field. Most phones sold today come with more than one messaging application, often one from the mobile device manufacturer and another from the wireless service provider. For example, a Samsung Galaxy S6 sold by Verizon comes with both Samsung’s Message service and Verizon’s Message+ service. While providers offer competing platforms of service, equipment and software, consumers can freely download a variety of other messaging services. For example, while I was in Paris last week, I used Google’s WhatsApp to bypass the Verizon network in order to message and make phone calls to friends over Wi-Fi. Google+, Google Voice and Go SMS Pro all offer popular messaging services. I currently have three text messaging apps on my phone.

In fact, there is a wide range of apps that can be readily downloaded by consumers – all of which will serve as text replacement apps, such as Evolve SMS, Handcent SMS, Hello SMS, HoverChat, Zlango, ChompSMS, IONU, Textra SMS, Hangouts and Pansi SMS, to name a few. Most of these apps are free to download and many of the services are free or low cost to use. For example, WhatsApp is free for the first year and then only $0.99 annually, thereafter.

With so many choices available to consumers, the FCC should not be fooled into taking an action that will benefit Twilio’s business case at the expense of others. Given a well-functioning, innovating, differentiating and highly competitive market, how would consumers benefit?

The reality is whether Twilio is successful in the market or not will have little bearing on consumer welfare in an already crowded market. However, if messaging becomes subject to Title II regulations, consumers will stand to lose. Unlike emails, text messaging is often free of spam. This is because some text messaging services use filtering technologies to limit spam, advertising and fraudulent activity, and some require “opt-in” requirements that protect consumers from unwanted messages. This has made messaging a valuable means of secure, private and convenient communications. In fact, while 20-25% of emails are opened within 24 hours, 90% of SMS messages are opened within 15 minutes.[1] This is because consumers can rely on these services to be generally free and “safe and trusted” communications.[2]

In other words, making messaging services subject to Title II regulations would jeopardize efforts by wireless providers to restrict spam and unwanted messages. That regulatory change will expose consumers to greater risk and possibly affect consumer reliance on this form of communications. In short, making messaging a Title II service appears to have elusive benefits, but will produce real costs for consumers.

Conclusion

The petition does not serve the best of interest of consumers and does not improve consumer welfare. Instead, the petition appears to be a veiled attempt by Twilio to use the regulatory process for its own financial gain. Therefore, we oppose the petition and urge the commission to reject it.

[1] “SMS Spam, Overview,” Cloudmark, at https://www.cloudmark.com/en/s/resources/whitepapers/sms-spam-overview

[2] Ibid.

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