Failures

by Karl Bode


Filed Under:
consumer protection, fcc, fines

Companies:
at&t, verizon



The FCC's Issuing More Fines Than Ever, But Taking Heat For Not Collecting Them

from the words-are-but-wind dept

While nobody expected much of former cable and wireless industry lobbyist turned FCC boss Tom Wheeler, he's actually been doing a relatively good job when it comes to standing up to entrenched broadband duopolists. From passing tougher net neutrality rules to taking aim at state level protectionist broadband law, he's often been on the side of the end user and actual competition. That has included an ocean of fines for fraud that, while wrist slaps for the bigger companies involved, have spearheaded a crack down on the kinds of behavior the FCC spent fifteen years pretending didn't exist.

AT&T has born the brunt of the FCC's fiery new disposition, be it a $100 million fine for lying about throttling, a $100 million fine for milking a subsidy fund reserved for the poor, a $105 million fine for allowing and aiding SMS cramming, or a $18 million settlement for defrauding the IP Relay program for the hearing impaired (noticing a trend at AT&T yet?).

But while the agency has been making a lot of media waves with some major fines over the last few years, it has also been taking criticism for not doing a particularly good job collecting the money owed. The collection process is notoriously slow, thanks in large part to expected company challenges (which have to occur 30 days after the fine is announced). But in some cases, companies that were found to be ripping off the government years ago not only haven't paid a dime, but are still eligible to collect subsidies:
"In announcing some of the proposed Lifeline fines in 2013, the agency trumpeted, “Today's actions constitute the most recent step in the Commission's significant efforts to root out waste, fraud, and abuse in the Lifeline program and preserve the overall integrity of the Universal Service Fund (USF).” But the FCC has yet to officially impose the penalty on those companies -- and several are still deemed eligible to receive FCC reimbursements for phone subsidies, according to data from the Universal Service Administrative Company, which runs Lifeline.
In other words, historically-flimsy wrist slaps are notably more flimsy when there's no actual slap involved. That said, the FCC has responded with a blog post in which it argues it collected 88.6% of the fines levied in 2015, up notably from the 55% collected in 2011, and the 39.2% collected in 2012. So not only are the number of fines being issued up, so is the rate of collection under Wheeler. The FCC also tries to argue that the bad press can sometimes be enough to get companies to change their behavior:
"...a spokesperson said the practice of issuing proposed fines -- technically called notices of apparent liability (NALs) -- is a major tool to protect consumers, even if companies don’t ultimately pay a full penalty. The FCC, which says it normally conducts extensive inquiries before proposing a fine, has seen instances of companies adjusting practices to comply with agency rules after an NAL is filed, said the spokesperson, who declined to be identified, saying the FCC has a policy about not speaking on the record about its enforcement bureau."
Note too that some of the Congressional criticism on this front is ironic posturing. Many of the complaints emerged at a recent series of House hearings designed to publicly scold the FCC for standing up to broadband ISPs on net neutrality, with the end goal of stripping the agency of both funding and authority. Odd, then, that these same folks are concerned the FCC somehow isn't being aggressive enough despite actually in some ways being more aggressive than ever. Still, critics are right to note that while the number of fines the FCC is issuing is higher than ever, the roar of a lion eventually becomes somewhat less imposing when followed by a toothless smile.

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  • icon
    That One Guy (profile), 3 Dec 2015 @ 8:07am

    "You'll pay, one way or another..."

    But the FCC has yet to officially impose the penalty on those companies -- and several are still deemed eligible to receive FCC reimbursements for phone subsidies, according to data from the Universal Service Administrative Company, which runs Lifeline.

    If the companies have yet to pay back the full amount of their fines, then either suspend completely their eligibility for subsidies until they've paid the fines, or subtract the amount they can get from the subsidy amounts they would have gotten.

    Owe $100 million, and eligible for a $100 million reimbursement? Congrats, they get nothing, though on the plus side their balance is now clear, and they'll be eligible for future reimbursements, should they be in line to receive them and aren't on the hook for more fines at that time.

    reply to this | link to this | view in chronology ]

    • icon
      PRMan (profile), 3 Dec 2015 @ 11:12am

      Re: "You'll pay, one way or another..."

      Show up with at their office building with the local sheriff and start collecting stuff.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 3 Dec 2015 @ 11:42am

        Re: Re: "You'll pay, one way or another..."

        Show up with at their office building with the local sheriff and start collecting stuff.

        The FCC wouldn't even have to go to their offices. They could just revoke some the licenses to some of the wireless spectrum AT&T holds and auction it off. AT&T would shit it's pants.

        reply to this | link to this | view in chronology ]

        • icon
          John Fenderson (profile), 3 Dec 2015 @ 1:43pm

          Re: Re: Re: "You'll pay, one way or another..."

          Revoke licenses? Doesn't that seem a bit harsh? After all, it's not like these companies showed a woman's nipple on TV for 200 milliseconds.

          reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 4 Dec 2015 @ 11:37am

          Re: Re: Re: "You'll pay, one way or another..."

          AT&T would shit it's pants.

          Which is why it won't happen.

          The FCC speaks loudly but carries a small twig.

          reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 8:44am

    This is more like air blows on the wrist.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 8:46am

    Short Term Memory

    Sure "bad press can sometimes be enough to get companies to change their behavior" for a short time and then the companies go back to their old ways when "no one is looking". Why not, it really didn't cost them anything the previous time.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 10:03am

    So, this is a legitimate criticism of the FCC, rather than the endless turducken of stupid that we normally see.

    Good to know.

    reply to this | link to this | view in chronology ]

  • identicon
    annonymouse, 3 Dec 2015 @ 12:18pm

    That would be a huge dry cleaning and sanitation bill. It may even require the use of the cities snow clearing equipment.

    reply to this | link to this | view in chronology ]

  • identicon
    AnonCow, 3 Dec 2015 @ 5:01pm

    I didn't know that there was a "PR penalty" and then the ACTUAL penalty.

    Let's see the stats on the number of PR penalties announced versus actual total penalties collected.

    I'll wager it isn't anywhere near 80+%.

    reply to this | link to this | view in chronology ]

  • icon
    toyotabedzrock (profile), 3 Dec 2015 @ 7:15pm

    Ultimately unless they stole from federal funds or customers in a direct way the big win will be compliance. Some of the fines seem geared towards that goal or are rushed to stop bad billing behaviors and can be calculated later.

    reply to this | link to this | view in chronology ]

  • icon
    Coyne Tibbets (profile), 3 Dec 2015 @ 8:25pm

    Wink wink nudge nudge

    So I'm gonna have to issue a little fine against ya, know what I mean, know what I mean? [wink, wink, nudge, nudge]

    But then, we'll say no more about it, say no more. Get it? Know what I mean, know what I mean? [wink, wink, nudge, nudge]

    And I bet you'll still be enjoying those subsidies, won't you, won't you? Know what I mean, know what I mean? [wink, wink, nudge, nudge]

    reply to this | link to this | view in chronology ]

  • identicon
    Reggie, 5 Dec 2015 @ 2:15pm

    A modest proposal ... sort of

    How about the FCC/FTC et al set up a "Hit Squad", much like the CIA/NSA bunch. Then, if the fine is not paid in 30-days after the imposition of said fine, then they "activate" the hit on all the officers, directors and senior managers at the offending company.

    [Note: For the humor impaired, This is Satire. However, it also makes for pleasant wishful thinking.]

    reply to this | link to this | view in chronology ]


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