Is the FCC Hung Up on Small Carriers?

It’s “slamming-and-cramming” meets “he said, she said.”

The Federal Communications Commission’s Enforcement Division plans to fine four long-distance carriers $29.6 million for what it alleges is a slamming and cramming scheme by the firms.

Slamming refers to switching customers to a provider without the customers’ permission. Cramming is then adding charges to the bills of these unwitting new customers.

The Federal Communications Committee says it has 140 people, all with Hispanic surnames, who have complained the companies contacted the customers about nonexistent postal packages then recorded their voices appearing to give permission to switch to their services. The agency says when it confronted the companies, they created false recordings of customers asking to switch carriers.

Agency officials said the companies targeted immigrants who use calling cards and prepaid calling plans to avoid prohibitively expensive fees by major carriers on calls back to Central and South America.

They said the companies not only switched customers without their authorization, they refused refunds to customers who complained unless those customers went to the FCC, state regulators or the Better Business Bureau.

The agency not only notified the companies they would be fined, it said they had not responded as quickly as expected and thus were subject to being shut down.

The firms involved  – OneLink Communications., TeleDias Communications, TeleUno and Cytel – said they “vehemently disagree” with the findings. They said the agency was “overzealous” and they are willing to fight this through the agency or even the courts if necessary.

They say the “entire process was overtly biased, fundamentally flawed and politically motivated” and the Enforcement Bureau “time and again chose to ignore facts and evidence presented by the companies.”

Could the fines be politically motivated? These phone companies would not be the first to suggest as much from the Enforcement Bureau of the FCC.

The bureau is run by Travis LeBlanc, a former federal prosecutor and top aide to California Attorney General Kamala Harris who makes no secret of his political ambitions.

Since taking over in March 2014, LeBlanc has turned the agency upside down. He has gone after the biggest of the big and racked up the largest fines in the agency’s history — $365 million in fines, settlements and refunds against firms such as AT&T, ESPN, Marriott, Pay Pal, T-Mobil and Verizon in less than two years.

Internet Service Providers say he changed the rules dramatically on them, then seemed to come up with rules retroactively to punish them.

In one three-month period, he issued a $100 million fine to phone companies for reportedly defrauding a government program and $35 million to a Chinese firm for selling illegal cell phone jamming equipment. Those fines made news when it was revealed they were issued with great fanfare but never collected, leaving lawmakers to wonder why the fines were issued in the first place.

LeBlanc, who took over in 2014, occupies a post normally held by a Federal Communications Commission lawyer, who is trained in telecommunications and related law. He has made a career of prosecuting technological and telecommunications crime.

He has no problem with what critics call “gotcha enforcement,” in which they say he prosecutes crimes in what National Journal has called legal gray areas “where the companies might not have even realized they were doing anything wrong.”

“When you’re in enforcement,” he told the National Journal, “you’re almost always working in a grey area.”

So, on the one hand, we have small-fry phone companies that cater to lower-income immigrants looking to talk to the folks back home. They deny with uncommon ferocity any wrongdoing and have vowed to vigorously defend themselves against what they say are “baseless claims, misrepresented circumstances and trumped-up fines.”

On the other hand, we have an aspiring politician who seem to push constantly into those “gray areas,” who seems more interested in scalps than promoting good communications policy. He seeks to keep regulations deliberately “vague, fluid and effectively limitless” to keep his prosecutorial options open, according to the Internet Service Providers.

In a shot at LeBlanc, one of the FCC commissioners, Michael O’Rielly, has vowed to be “vigilant in resisting any attempts by the agency to act as a referee enforcing rules known to none of the players and made up along the way.”

If LeBlanc succeeds in shutting down the phone companies, he will have eliminated not only the companies but all who work for them. He will have cut off low-income people from a vital service and increased the market share of the industry’s giants – which almost certainly means higher prices for the mostly low-income customers.

If you want to know why people don’t trust government, look no further than this. We don’t always make the best decisions when it comes to laws. But we deserve to live under the ones we made, not those made up by politicians dressed up as prosecutors looking to grow their reputations.