Regulatory Overview

1
Wireless Regulatory SummitNovember 30, 2004

• Regulatory Overview
• Edwin N. Lavergne
• Fish Richardson P.C.
• Washington, DC

2
The Rules of Engagement

• The evidence continues to mount that games, ring
  tones, rudimentary online video and everything
  else involving cellphones are becoming techs
  fabled Next Big Thing. While cellphones are
  clearly emerging as a new platform, one thing
  that is not at all clear is what the rules of
  engagement for this platform are going to be.
  It will be a great story to watch unfold.
• The Wall Street Journal (November 8, 2004) at B1.

3
Overview

• CAN SPAM Act
• Unsolicited commercial email
• TCPA
• Telemarketing
• TDDRA
• Telephone billed services

4
SPAM

• Origin of the term
• Use of the term "spam" was adopted as a result
  of the Monty Python skit where the SPAM meat
  product was featured. In the skit, a group of
  Vikings sang a chorus of "spam, spam, spam . . .
  " drowning out other conversation. Hence, the
  analogy unsolicited commercial e-mail was
  drowning out normal discourse on the Internet.
• -- The Official SPAM Website,
  www.spam.com/ci/ci_in.htm

5
CAN-SPAM Act

• Controlling the Assault of Non-Solicited
  Pornography and Marketing Act of 2003
  (CAN-SPAM)
• Law signed by President on December 16, 2003
• Became effective on January 1, 2004
• Covers e-mail designed to advertise or promote a
  commercial product or service
• Transactional or relationship messages are
  exempt from most provisions of the Act

6
CAN-SPAM Legal Requirements

• Bans false or misleading headers
• Prohibits deceptive subject lines
• Requires that commercial email be identified as
  an advertisement and include the senders valid
  physical postal address
• Requires a clear and conspicuous opt-out mechanism

7
OPT-OUT

• Within 10 days of receipt of an opt-out request,
  the sender must
• Ensure no further messages are sent to recipient
• Ensure recipients email address isnt released,
  sold, leased or otherwise transferred

8
CAN-SPAMEffect on State Law

• Most of the 36 state anti-spam laws are preempted
  by the federal CAN-SPAM Act
• This Act supersedes any statute, regulation, or
  rule of a State that expressly regulates the
  use of electronic mail to send commercial
  messages, except to the extent that any such
  statute, regulation, or rule prohibits falsity or
  deception in any portion of a commercial
  electronic mail message or information attached
  thereto.
• 15 U.S.C. 7707

9
CAN-SPAMPenalties

• Each violation is subject to fines of up to
  11,000.
• Additional fines may be imposed on persons who
  harvest or generate e-mail addresses.
• The Department of Justice may seek criminal
  penalties, including imprisonment, for certain
  activities including
• Use of another persons computer without
  authorization to send commercial e-mail
• Use of falsified header information

10
FTC Rules

• The CAN-SPAM Act directed the FTC to adopt
  regulations prescribing clearly identifiable
  marks or notices to be included in e-mail that
  contains sexually oriented material.
• In April of 2004 The FTC issued regulations
  requiring, among other things, that sexually
  oriented e-mails include in the subject line the
  phrase SEXUALLY-EXPLICT.

11
FTC Rules (continued)

• The CAN-SPAM Act also directed the FTC to adopt
  regulations not later than December 16, 2004,
  defining the relevant criteria to facilitate the
  determination of the primary purpose of an
  e-mail message.
• A commercial electronic mail message is any
  electronic mail message the primary purpose of
  which is the commercial advertisement or
  promotion of a commercial product or service.
• Regulations to be released shortly.

12
FCC Rules

• The CAN-SPAM Act directed the FCC to issues rules
  to protect consumers from unwanted mobile
  service commercial messages.
• A mobile service commercial message is defined
  as a commercial electronic mail message
  transmitted directly to a wireless device that is
  utilized by a subscriber of a commercial mobile
  service in connection with such service.
• 47 C.F.R. Section 64.3100(c)(7)

13
FCC Rules (continued)

• The FCCs rules were issued in August of 2004.
• With todays Order, the Commission shields
  consumers wireless devices from unsolicited,
  costly, and sometimes indecent messages.
• FCC Chairman Michael K. Powell, August 4, 2004.
• The rules became effective on October 18, 2004.

14
Key Elements of the FCCs Rules

• The rules flatly prohibit sending commercial
  messages to wireless Internet domains unless the
  sender has obtained the express prior consent
  from the recipient (the recipient must opt-in).
  
• Any commercial message is covered as long as it
  is sent to an e-mail address provided by a
  wireless carrier for delivery to a subscribers
  wireless device through the Internet.
• 20255512132_at_vtext.com Opt-in necessary
• Lavergne_at_fr.com Opt-out option necessary

15
SMS Not Covered But,

• Phone-to-phone SMS messages are not covered by
  the FCCs new rules.
• But, the FCCs existing telemarketing rules
  already prohibit any call, including voice calls
  and text messages, to any wireless phone using an
  automatic dialing system.
• NOTE The ban on autodialed calls applies to
  any call to a wireless device (it is not limited
  to commercial messages).

16
The Rules Apply to Everyone

• The big cellphone system operators like Verizon
  and Sprint currently enjoy a position as
  gatekeepers, able to control access to their
  networks. They are going to fight to keep that
  tollbooth function by preventing cell networks
  from morphing into Web-style open roads to which
  anyone can have access.
• The Wall Street Journal (November 8, 2004) at B1.

17
Including Wireless Carriers

• Verizon and other carriers had argued that they
  should not be required to obtain affirmative
  consent from their own customers to send
  commercial messages as long as they are not
  charged for such messages.
• The FCC rejected this position stating
• We decline to grant cellular carriers a
  special exemption from the requirement to obtain
  express prior authorization from their current
  subscribers The Act itself requires us to
  protect consumers from unwanted commercial
  messages, not only those that have additional
  costs.
• Order, released Aug. 12, 2004 at paragraph 66.

18
How to Comply with FCC Rules

• Monitor the soon-to-be-published list of wireless
  Internet domain names to take advantage of safe
  harbors from liability.
• Revise your privacy policy to reflect compliance
  with the FCCs new regulations
• Make any necessary changes to agreements with
  third party marketing partners.
• Obtain the affirmative consent of persons to whom
  you want to send commercial messages.

19
OPT-IN

• Authorization may be oral, written or electronic
• Authorization must include the e-mail address to
  which messages will be sent
• Consumers must not bear an additional costs to
  provide authorization
• Negative options are inadequate

20
What about TDDRA?

• The Telephone Disclosure and Dispute Resolution
  Act was enacted to provide consumer protection in
  connection with telephone information and
  entertainment services.
• The law was passed by Congress to address unfair
  and deceptive practices in situations where
  consumers must pay a charge in addition to the
  normal transmission charges associated with a
  phone call.

21
FCC Regulations Adopted Pursuant to TDDRA

• The FCC regulates pay-per-call services defined
  as including
• (1) Any product or service for which charges are
  assessed on the basis of completion of the call
  and
• (2) the caller pays a per-call or per-time
  interval charge that is greater than or in
  addition to the charge for transmission of the
  call.
• With just two exceptions if the service meets
  these two tests, it must be provided through a
  900 number.
• EXCEPTIONS Directory services and services
  offered pursuant to a presubscription agreement.

22
FTC Regulations Adopted Pursuant to TDDRA

• The FTC regulates the advertising of 900 number
  services (type size, required ad disclosures
  etc.).
• The FTC also regulates the billing and collection
  of pay-per-call services and other telephone
  billed purchases.
• The term telephone billed purchase is defined
  more broadly than a pay-per-call service to
  include any purchase that is completed solely
  as a consequence of the completion of the call or
  a subsequent dialing, touch tone entry, or
  comparable action of the caller.

23
Does TDDRA Affect Wireless Services?

• The purchase of a product or service through a
  wireless phone that results in a telephone billed
  charge that is greater than, or in addition to,
  the charge for the transmission of a wireless
  call could be considered a telephone billed
  purchase regulated by the FTC.
• Under the FCCs rules, unless a premium billed
  wireless service is classified as a directory
  service or offered pursuant to a written
  presubscription agreement, one could argue that
  it would need to be accessed only through a 900
  number.

24
Ambiguities Remain

• In comments filed by ATT Wireless with the FCC
  last year, ATT stated that ambiguities in the
  pay-per-call rules currently inhibit wireless
  service providers from offering new and
  innovative content to their subscribers.
• ATT Wireless also stated that the use of written
  presubscription agreements in accordance with the
  FCCs rules would be burdensome, decrease
  convenience for consumers, and prevent consumers
  from accessing services quickly and on demand.
• Comments of ATT Wireless in CC Docket No.
  96-146, filed May 12, 2003.

25
The Rules of Engagement?

• What aspects of TDDRA, if any, will apply to
  premium billed wireless services?
• How effective will the FCCs new regulations be
  in stopping unwanted commercial solicitations to
  wireless devices?
• Will wireless carriers have to abide by the same
  tough opt-in rules that affect everyone else?
• Will the FTCs clarifications provide needed
  guidance on exactly what constitutes a commercial
  message?

26

• Edwin N. Lavergne
• Principal
• Fish Richardson P.C.
• 1425 K Street, N.W.
• Washington, DC 20005
• 202-626-6359 (Direct Dial)
• lavergne_at_fr.com