Thomas Crowe, Esq.
Wireless products and services are ever evolving and, as with most communications services, this constant change also brings about corresponding legal and regulatory developments. Wireless dealers, since they are often the parties interfacing directly with retail customers, may find themselves fielding an increasing number of questions in this arena. Curious customers will certainly want to know how the current legal and regulatory regime, as well as upcoming regulatory developments, might affect the services to which they subscribe. Topics of frequent concern include early termination fees, defense against unsolicited commercial phone calls, and more recently, protection from unsolicited commercial text messages. The following brief summaries on these three topics may help wireless dealers address questions or concerns that their customers might have.
Early Termination Fees
Many wireless plans come standard with set contract terms of either one year or two years, which has typically also meant a substantial penalty for early termination. Most savvy wireless consumers are well aware of such early termination fees, and have always sought ways to either reduce the fees or avoid being subject to them altogether. The past year has brought about significant changes in the ways that wireless carriers assess early termination fees. Rather than charging a large fixed early termination fee regardless of when a contract is terminated, all of the major carriers have now implemented a pro-rated early termination fee structure. Sprint, the last major carrier to do so, announced the switch to a pro-rated termination fee structure in November of this year. Sprint will now reduce its early termination fees by $10 a month, starting in the sixth month of a contract term.
These changes have been driven largely by class-action lawsuits filed against the major carriers and the keen interest that the Federal Communications Commission (“FCC”) has recently taken in the matter. The FCC held a hearing to discuss the issue in June of this year, and hinted that further action to establish a uniform federal regulatory environment (as opposed to varying state by state regulation) for early termination fees was likely to occur in the future. The industry seems to have settled on its own uniform fee structure for the time being, but future regulatory developments that affect early termination fees are likely to occur.
Wireless Do-Not-Call
Unsolicited commercial phone calls have long been an annoyance for many telephone subscribers. However, for wireless users who must pay for their airtime, unsolicited commercial calls can be both annoying and costly. Luckily, telemarketers’ access to wireless customers has been increasingly restricted by federal law. Since 1991, the Telephone Consumer Protection Act (“TCPA”) has imposed certain restrictions on telemarketers who wish to contact wireless customers for commercial purposes. For example, the TCPA prohibits the use of any auto-dialers, predictive dialers, artificial voice or pre-recorded voice to place calls to any wireless number except for emergency purposes or with the wireless customer’s express consent. Since most telemarketers use auto-dialers or predictive dialers, this essentially eliminates many potential unsolicited commercial calls.
Wireless customers who want further protection against telephone solicitations from commercial telemarketers can also register their wireless number with the national Do-Not-Call Registry (http://www.donotcall.gov). However, telemarketers may still call numbers listed with the Do-Not-Call Registry in certain situations. For example, the registry does not cover the following: 1) calls from organizations with which a customer has an established business relationship; 2) calls for which a customer has given prior written permission; 3) calls which are not commercial or do not include unsolicited advertisements; and 4) calls by or on behalf of tax-exempt non-profit organizations.
Wireless SPAM
The increasing popularity of text messaging has not gone unnoticed by commercial marketers. It is a simple yet highly effective method of passing information to a large number of consumers, but engaging in a mobile text messaging advertising campaign these days can be rather costly. Just ask clothing and shoe retailer The Timberland Company, which recently settled an unsolicited text message advertising lawsuit for seven million dollars.
Like other wireless services, consumers typically pay for text messages they receive, leading to a high degree of intolerance for unsolicited commercial text messages. Fortunately, the TCPA and the more recent CAN-SPAM Act also restrict companies from sending unsolicited commercial messages to wireless devices using an Internet domain address. This essentially restricts marketers from blasting mass advertisements to wireless phones through Internet applications, which typically connect to wireless devices by sending messages to NUMBER@YOURCARRIER type addresses.
Unfortunately, the FCC’s ban on unsolicited commercial messages to wireless devices does not extend to anyone simply using SMS (Short Message Service) to send text messages directly from one wireless phone to another. Luckily, most companies probably will not have the patience to individually thumb type thousands of SMS messages to all of their potential customers. However, as text messaging and mobile marketing strategies continue to grow and evolve, there is likely to be even further legal and regulatory action in this area.
November 21, 2008
The author is a Washington, D.C.-based attorney specializing in communications legal/regulatory matters. He was assisted in preparing this article by Cheng-yi Liu, an attorney with the firm. They can be reached at 202-263-3640, via e-mail at .(JavaScript must be enabled to view this email address) or through the firm’s website at http://www.tkcrowe.com. This article is provided for informational purposes only, and is intended neither to provide nor to substitute for legal advice.