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In a blow to wireless industry giants, a federal appeals court has ruled that the Federal Communications Commission got it wrong when it said that states cannot regulate the appearance of cell phone bills. The unanimous ruling by a three-judge panel of the 11th U.S. Circuit Court of Appeals means that the Georgia Public Service Commission and similar commissions around the country can enforce laws limiting what wireless providers can put on their bills. Rulings from the 11th Circuit usually control law in only Georgia, Florida and Alabama, but this decision has nationwide impact because it vacates the order of a federal agency. “A lot of the state laws that were under a cloud, that cloud has been removed,” said Patrick W. Pearlman, who argued the case for the state consumer advocates against the FCC. The case dealt with laws such as Georgia’s O.C.G.A. � 46-5-167(h), which forbids a telecommunications company from passing the company’s contribution to the state’s universal access fund onto a customer in the form of a separate line-item surcharge on the customer’s bill. Instead, if the provider wants to recoup the money, it has to raise its basic rate. Pearlman, deputy consumer advocate for the West Virginia Public Service Commission, explained that allowing cell phone companies to set out charges for taxes, fees and surcharges on the bills they send to consumers makes it harder for consumers to compare rates. State consumer advocates also told the court that sometimes cell phone bill line items carry descriptions that suggest they are taxes being passed to the consumer when they are not. In March 2005, the FCC issued an order saying that states couldn’t make those kinds of rules, because “overbroad state regulations” might “frustrate” the federal government’s objective to minimize regulation on the wireless industry. Both the National Association of State Utility Consumer Advocates�a nonprofit organization of consumer advocates from 42 states, including Georgia�and the Vermont Public Service Board filed separate petitions asking federal courts of appeal to review the FCC order. The multidistrict litigation panel ordered that the petitions be consolidated and the 2nd Circuit transferred the Vermont board’s petition to the 11th Circuit, where the petition of the advocates’ association had been filed. Federal law puts the federal government in charge of regulation of cell phone rates, and the FCC, backed by the major wireless carriers and their Cellular Telecommunications & Internet Association, argued that its order was right because restrictions on line items in wireless bills affect the manner in which cell phone companies set rates. The 11th Circuit panel of Judges Susan H. Black and William H. Pryor Jr. and Senior Judge Emmett Ripley Cox rejected both the FCC’s defense of its March 2005 order and arguments by the wireless industry that the consumer advocates’ association didn’t have standing to bring the case. Writing for the panel, Pryor said the court found that the FCC had exceeded its authority in issuing that order because the federal statute at issue “unambiguously preserved the ability of the States to regulate the use of line items in cellular wireless bills.” “Although the term �rates charged’ is not defined in the Communications Act, the meaning of this term is clear in this context,” wrote Pryor. “A straightforward reading of the complementary phrases �regulate entry of or the rates charged’ and �other terms and conditions,’ 47 U.S.C. � 332(c)(3)(A), evidences the �clear and manifest purpose of Congress’ to leave the regulation of line items to the states.” FCC counsel Laurel R. Bergold declined to comment on whether the FCC would seek further review of the 11th Circuit panel opinion, adding that the commission had plenty of time to decide what to do. A statement by Steve Largent, the president and CEO of the cellular telecommunications association, suggested that the wireless companies will head to Capitol Hill for help. “This decision highlights the need for Congress to re-establish a firm and consistent national regulatory framework for wireless service,” said Largent, a former Republican congressman from Oklahoma. “Creating a mishmash of inconsistent state-by-state wireless regulations will do nothing to benefit consumers and doesn’t make sense.” When the FCC issued its order, it was comprised of Republicans Michael K. Powell, Kathleen Q. Abernathy and Kevin J. Martin and Democrats Michael J. Copps and Jonathan S. Adelstein, with Copps and Adelstein both dissenting. Deborah Taylor Tate and Robert M. McDowell since have replaced the Republican spots filled by Powell and Abernathy. Despite the Georgia law, the impact of the 11th Circuit decision on the state is somewhat academic. The PSC has not made wireless providers pay into the universal access fund, according to Bill Edge, public information officer for the PSC. Edge explained that the fund provides financial support to smaller telephone companies with an eye to ensuring that Georgians in rural areas�where extending phone service is more costly to the providers�have phone service. Acknowledging that the immediate impact for Georgia was limited, a spokesperson for Gov. Sonny Perdue’s Office of Consumer Affairs said that the 11th Circuit ruling opens the door for the future. “A lot of states are saying, �We don’t want to be pre-empted,’” said spokesperson Bill Cloud. The 11th Circuit ruling gives states the opportunity to regulate cell phone bills if they see fit, he said. The cases were National Association of State Utility Consumer Advocates v. FCC, No. 05-11682, and Vermont Public Service Board v. FCC, No. 05-12601. Alyson M. Palmer can be reached at [email protected]

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