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Recent Amendments to the Communications Act of 1934

Telephone companies that are subject to federal jurisdiction under the Communications Act are also subject to any other applicable laws, regulations, or rules enacted by Congress or promulgated by a federal agency. On three occasions during the 1990s Congress amended the Communications Act of 1934, updating its provisions in light of technological developments and market conditions. In 1991 Congress passed the Telephone Consumer Protection Act (TCPA) to give Americans greater freedom at home from unsolicited commercial advertisements. 47 U.S.C.A. section 227. The TCPA generally imposes restrictions on unsolicited advertisements made through automatic telephone dialing systems, artificial or prerecorded voice messages, and telephone facsimile machines.

The FCC began fleshing out these restrictions when it promulgated a regulation requiring telemarketers to create do-not-call lists for consumers who ask not to receive further solicitation. The FCC also limited the hours during which telemarketers may call a consumer’s residence (not prior to 8 a.m. or after 9 p.m.). Additionally, the FCC issued a rule flatly prohibiting the transmission of unsolicited advertisements via telephone facsimile machines. Finally, the FCC published a regulation requiring all artificial or prerecorded messages delivered by an auto-dialer to clearly identify the caller at the beginning of the message.

In 1992 Congress again amended the Communications Act of 1934, when it passed the Telephone Disclosure and Dispute Resolution Act (TDDRA). 15 U.S.C.A. section 5701. The TDDRA regulates how telephone carriers may offer pay-per-call services (e.g., 900 numbers), and prohibits unfair and deceptive practices undertaken by telephone carriers in connection with pay-per-call services, including mis-leading and fraudulent billing and collection practices.

Specifically, the TDDRA provides that any interstate telephone service, other than a telephone company directory assistance service, that charges consumers for information or entertainment must be provided through a 900 number unless it is offered under what is termed a “pre-subscription or comparable arrangement.” That pre-subscription or comparable arrangement may be a preexisting contract by which the caller has “subscribed” to the information or entertainment service. The arrangement may also be made through the caller’s authorization to bill an information or entertainment service call to a prepaid account or to a credit, debit, charge, or calling card. Telephone companies may not disconnect local or long-distance telephone service for failure to pay 900 number charges, and must offer consumers the option of blocking access to 900 number services if technically feasible. Telephone companies that bill consumers for pay-per-call and pre-subscribed information or entertainment services must show those charges in a portion of the bill that is separate from local and long-distance charges.

Despite increased regulation at the federal level, the telephone service market in the United States remained largely monopolistic for most of the twentieth century, continuing to be dominated by a few small companies in each region of the country. Congress attempted to increase competition by passing the Telecommunications Act 1996 (the “1996 Act”), which allows multiple “local exchange carriers” (LECs) to compete for customers. 1996 Pub.L. No. 104-104. The 1996 Act amends the 1934 Act by distinguishing between incumbent LECs (ILECs) and competing LECs (CLECs). ILECs are existing telephone service providers that have established a telecommunications network in a given market. CLECs are telephone service providers that seek access to an ILEC’s market.

One way in which the 1996 Act attempts to improve competition is through “interconnection agreements” and “reciprocal compensation agreements.” 47 U.S.C.A. section 251. “Interconnection agreements” require ILECs to make their telecommunications networks available (via purchase or lease) to CLECs so that a phone call initiated by the customer of an ILEC may be connected to the customer of a CLEC, and vice versa. “Reciprocal compensation agreements” require the carrier for the customer who initiates a phone call to share some of its revenues from that call with the carrier of the customer who receives the call (the telecommunications industry describes the LEC of the customer who receives the call as the one that “terminates” the call and not the one that “receives” it). These requirements were challenged and upheld in federal court on two separate appeals, and are now under consideration by the U.S. Supreme Court. Illinois Bell Telephone Co. v. Worldcom Technologies, Inc., 179 F.3d 566 (7th Cir. 1999); Bell Atlantic Maryland, Inc. v. MCI WorldCom, Inc., 240 F.3d 279 (4th Cir. 2001). In a related case, the U.S. Supreme Court upheld FCC rules that require ILECs to lease their networks to competitors at heavily discounted rates. Verizon Communications, Inc. v. F.C.C., ―U.S.―, ― S.Ct. ―, ― L.Ed.2d ―, 2002 WL 970643 (U.S., May 13, 2002).

Inside Recent Amendments to the Communications Act of 1934