“Kafkaesque” Ruling from FCC Fines AT&T $100 Million

Jun 19, 2015
by Bob Adelmann

In The Trial, Franz Kafka told the story of a man arrested and prosecuted by a remote, inaccessible authority, with the nature of his crime revealed neither to him nor to the reader. Left unfinished at his death, a ghostwriter completed the novel, which became one of Kafka’s best known and frightening novels.

In it, Kafka described perfectly the ruling announced on Wednesday by the hidden anonymous commissars of the Federal Communications Commission: penalizing AT&T, the country’s second largest telephone service provider, $100 million for transgressing its “transparency rule.” It added insult to injury by demanding that the company install certain “requirements” to assure no further transgressions by the company.

Except that AT&T has been meticulously following what it believed to be required of it by that rule ever since it was first promulgated by the FCC in 2010. For four years, the FCC was quiescent. For four years, AT&T assumed it had met all of its requirements.

When the FCC released its ruling, two of those commissars had the temerity to challenge the majority. Quoting from Kafka’s The Trial, Ajit Pai summed up what AT&T is facing:

[I]t is an essential part of the justice dispensed here that you should be condemned not only in innocence but also in ignorance.

FCC “justice.” AT&T, alleges the FCC, “inhibited consumers’ ability to make informed choices about mobile broadband services … [AT&T] apparently willfully and repeatedly violated the Commission’s Open Internet Transparency Rule….” The FCC added:

AT&T’s practices deprived consumers of sufficient information to make informed choices about their broadband service and thereby impeded competition in the marketplace for such services.

Consistent with the Commission’s forfeiture guidelines, and based on the seriousness of AT&T’s apparent [there’s that word again] violations, we propose a forfeiture of $100,000,000 and a set of requirements to bring AT&T into compliance with [our] Transparency Rule.

The basic assumption underlying the FCC’s mission is that the free market cannot provide the restraints needed to give potential customers all the information they need to make an informed judgment. It assumes that competition wouldn’t keep AT&T in line. It assumes that all service providers are “apparently” liars, thieves, and deceivers, interested only in mulcting unsuspecting, uninformed, and witless customers of their wealth in exchange for worthless or faulty services. It is, in essence, the ultimate governmental hubris: we can do for you what you cannot do for yourselves. Trust us.

Furthermore, in light of the FCC’s self-determination of its righteousness, it issues rules that these alleged deceivers must follow. And even further, that those rules may be “adjusted” to fit circumstances as necessary. Without notice.

Dissident Commissioner Pai put it well:

A government “rule” suddenly revised, yet retroactive. Inconvenient facts ignored. A business practice sanctioned after years of implied approval. A penalty conjured from the executioner’s imagination.

These and more Kafkaesque badges adorn this Notice of Apparent Liability (NAL), in which the Federal Communications Commission seeks to impose a $100 million fine against AT&T for failing to comply with the apparently opaque “transparency” rule the FCC adopted in its 2010 Net Neutrality Order.

In the beginning the FCC was relatively benign. Its original mission, under the Communications Act of 1934 signed into law by then-President Franklin Roosevelt, was to “make available so far as possible, to all the people of the United States … rapid, efficient, nation-wide and world-wide wire and radio communications services with adequate facilities at reasonable charges.”

Nothing was said about wireless communications, of course, but mission creep soon resolved that discrepancy. As to why such services must be provided to “all the people of the United States,” that issue must be addressed elsewhere.

The FCC’s mission was further elaborated in its 2006-2011 Strategic Plan:

All Americans should have affordable access to robust and reliable broadband products and services. Regulatory policies must promote technological neutrality, competition, investment, and innovation to ensure that broadband service providers have sufficient incentives to develop and offer such products and services.

Reasonable people would think this meant that a “light regulatory” touch on the newly emerging technology would serve Americans best, with the FCC’s stated interest in promoting “competition, investment, and innovation” along with “sufficient incentives” to allow companies like AT&T to continue making the billions of dollars of investments required to keep up with the competition and provide services that increasingly sophisticated consumers are demanding.

But the wimpy creature from 1934 has grown into today’s Kafkaesque monster. AT&T did its best to keep its customers informed of life in the real digital world in accordance with what it believed were the FCC’s intentions under its transparency rule, including:

Issuing a press release in 2011 to more than 2,000 news outlets;

Including an insert in its bills explaining its policy;

Posting an informational page on its website about it, with a link to its AT&T Wireless website for more information;

Announcing the modification of its service contract in August 2012 to cover its response to potential congestion;

Sending text messages to its “unlimited data” users months before it began to slow data transmission, warning of possible slowdowns;

Sending text messages after it began slowing data transmission, explaining when that slowing would begin and offering suggestions on how to switch to a different plan to avoid possible congestion in the future.

But this wasn’t enough in the brave new world of Kafka. Pai accused the majority of ignoring AT&T’s efforts to comply. He accused them of violating its own rules of transparency. It accused them of changing the rules and then applying them retroactively to AT&T. He accused the majority of ignoring AT&T’s proven and diligent efforts to inform (and keep informed) its customers about the reality of life in the digital world, especially when special events (the Super Bowl, presidential debates, the retirement of David Letterman, etc.) load up the system beyond its present capacity:

Because the Commission simply ignores many of the disclosures AT&T made; because it refuses to grapple with the few disclosures it does acknowledge; because it essentially rewrites the transparency rule ex post by imposing specific requirements found nowhere in the 2010 Net Neutrality Order; because it disregards specific language in that order and related precedents that condone AT&T’s conduct; because the penalty assessed is drawn out of thin air; in short, because the justice dispensed here condemns a private actor not only in innocence but also in ignorance, I dissent.

So does AT&T which has promised to contest the ruling by the commissars of the Kafkaesque FCC. 

A graduate of an Ivy League school and a former investment advisor, Bob is a regular contributor to The New American magazine and blogs frequently at www.LightFromTheRight.com, primarily on economics and politics. He can be reached at bobadelmann@msn.com.

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Sources:

Fox News: AT&T slapped with $100 million fine related to ‘unlimited’ data plans

Competitive Enterprise Institute: FCC Ignores Rule of Law in Attempt to Fine AT&T for Throttling Wireless Users

The FCC’s announcement: AT&T Mobility Faces $100M Fine for Misleading Consumers

Broadband information from AT&T

Dissenting Statement of Commissioner Ajit Pai

Background on AT&T

FCC’s Open Internet Transparency Rule issued in 2010

History of FCC

Bio on Franz Kafka

Brief summary of The Trial

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