For if you suffer your people to be ill-educated, and their manners to be corrupted from their infancy, and then punish them for those crimes to which their first education disposed them, what else is to be concluded from this, but that you first make thieves and then punish them.
Thomas More, Utopia
It used to be an open secret that sections of the US communications industry were angry at the way the largest telcos dictate the policies of the Federal Communications Commission (FCC), the US comms regulator. Some now appear to be in open revolt over a two-tier strategy for consumer protection that boosts the profits of those large telcos. See how David Casem, CEO of CPaaS provider Telnyx, described the situation in a recent post to LinkedIn.
📢 The Campaign Registry: A Case Study in Regulatory Capture
Remember when The Campaign Registry (TCR) was introduced to curb spam/scam texts? Fast forward, consumers are inundated with more unwanted messages and calls than ever before. At the same time, legitimate businesses navigate a convoluted and costly registration process, padding the pockets of T‑Mobile, AT&T, and Verizon by hundreds of millions of dollars a year. Meanwhile, bad actors exploit prepaid SIMs with little hindrance…
The Campaign Registry is a privately-owned entity that has monopoly power over specific controls that are meant to prevent bad actors from terminating A2P SMS messages. It occupies a niche in a way that is typical of how the US effects consumer protection but would be atypical in most other countries. Put simply, it is an example of industry self-regulation where the US regulator permits a monopoly to exist because they would rather have the private sector do a job that involves protecting the public from harm instead of employing somebody in the public sector to do the same job. It is normally a duty of regulators to prevent monopolies from occurring but the FCC has a habit of doing the opposite. They tend to encourage the creation of monopolies that perform specific tasks. One advantage is that the FCC can say the public is being protected without anybody in the FCC being directly accountable for any failings of the entities exercising these monopoly powers. It also means that by the end of a paragraph explaining how the system works, most people feel so tired that they have already stopped reading.
You continued to read, which will help you appreciate why Casem segued from the TCR to the FCC while expecting a core audience of American insiders to understand how they are connected.
I guess the Federal Communications Commission’s obscure KYC rules only apply if you’re not represented by the former Chairman of the FCC, Ajit Pai, at the CTIA.
Next up, Branded Calling ID — where making a call will now cost you quadruple. You have to hand it to them. Security theatre [sic] is a good business.
Casem has his own reasons to wage a publicity war against the FCC after they threatened Telnyx with a potential USD4.5mn fine. I do not agree with all of Casem’s arguments against this proposed fine but his core complaint is valid. Telnyx was accused of breaking the FCC’s know-your-customer (KYC) rules even though the FCC has no KYC rules. It is important to state this point plainly because there appear to be no current or former FCC lawyers who are honest about the FCC’s tendency to imagine it has rules that nobody ever bothered to write down.
Being punished for breaking a rule that has never been written down could serve as a textbook example of arbitrary justice, irrespective of what anyone thinks the rules should say. So Casem has good grounds to question why Ajit Pai, a lawyer and former Chairman of the FCC, has landed a job where he will receive around USD4mn per year in compensation from an industry body, the CTIA, whose USD100mn per year funding mostly comes from the biggest US telcos. The same telcos were named by Casem as the beneficiaries of TCR, which is effectively responsible for imposing a kind of KYC obligation on upstream providers of SMS messages. If everybody agrees there is a need for KYC rules for a largely self-regulating industry, then perhaps the lawyers who later become worth USD4mn a year should write those KYC rules while they are still on the public payroll? But if they wrote clear and fair rules there might be less need for lawyering afterwards, and more criticism by the public of rules that were simply inept.
Regular readers will know that I disdain lawyers, and especially American lawyers, but I make an exception for Jonathan Marashlian, a communications industry lawyer who reliably shares insights that are fair and accurate. It matters that Marashlian followed up Casem’s post with this comment.
The regulatory capture described by David Casem warrants greater attention by government reformists.
Is it coincidence that Ajit Pai led the FCC when CTIA successfully petitioned for the reclassification of SMS as an unregulated information service?
Special thank you gift was awaiting him just as the National Cable Television Association (NCTA) handed former FCC Chairman Michael Powell their head honcho role after he solidified broadband’s deregulated status as an information service…
While we all just seemingly accept the revolving door of government service as the gateway to leadership roles in powerful trade associations and the Big Corporations the agencies are sworn to regulate in the “public interest,” should we? Why do we only pay lip service to the “wink wink, nod nod” quid pro quo that stares at us square in the eyes?
I am not alone in noticing how the consumer protection wing of the communications industry — which apparently hopes to rebrand itself as the ‘restore trust’ crew — increasingly looks like a front for all the US companies that routinely bid for control of those obscure monopolies of the type that is so common in the USA. They fail to notice the flaw with their branding exercise; there is a lot of overlap between the people who say they want to restore trust and the people who were responsible for losing the public’s trust. To make matters worse, they have a not-so-ingenuous way of making themselves sound like authorities in delivering trustworthy communications: they keep recruiting lawyers from the FCC. Several readers have been in touch to suggest that I write something about this latter phenomenon. I will refrain from naming the specific individuals they asked me to mention or the businesses which hired them. However, if you want to engage with me privately then I will share my opinions about who is receiving a quarter of a million dollars per year as a reward for being a useless tosspot.
It should be peculiar for me to notice which former regulators are being hired by various for-profit and nonprofit entities in the USA, given that I live in a different country which is 4,200 miles away. However, these organizations keep making it easy for me to learn about their new recruits because they have developed the habit of flying these ex-FCC lawyers to Europe, where they give sermons about how well the US industry is regulating itself, and how Europeans should learn from their example. They rarely voice the counterarguments made by many of their fellow Americans. They are lawyers; they are paid to argue the case for their clients. They are not impartial sources of advice on how to protect the public from harm, especially as few of them have much grasp of technology, and many have only a modest grasp of the law. Their lack of competence was likely a motivating factor in choosing a career path that ultimately led them to become niche Washington DC lobbyists. Their talent lies with words, and their words are often empty. The communications sector needs to change course by empowering people with the practical skills required to fight technology-enabled crimes.
Punching down on overpaid American lawyers is both rude and ineffective, which is why I have been trying to write less about them. As Thomas More observed, a society that trains people to be thieves needs the kind of reform that cannot be delivered by just punishing the thieves themselves. US consumer protection regulation of the comms sector is broken and getting worse. It serves little purpose for me to complain about nincompoops whose biggest skill is to brown-nose people in the vicinity of Washington DC. If that is somebody’s greatest skill, and somebody else offers to pay them an enormous salary to exercise that skill, it is unsurprising that the offer will be accepted. Drawing attention to the problem is not going to suddenly provoke a u-turn in US policy. People who get paid a lot of money to defend a catastrophic mess they have created will rarely undergo a Damascene conversion. My most realistic ambition is to highlight the role played by those shills from outside the USA who also seek to line their pockets by encouraging other countries to emulate the farcical situation in the USA. The best prospect of reforming US consumer protection policy would come from other countries so obviously delivering better results that more Americans begin to question the misinformation they have been fed.
The prompt for this article came from David Casem using my words to fuel his tirade against double standards in US regulation. Casem’s post linked to a Commsrisk article discussing evidence of rising numbers of T‑Mobile SIMs being used by scammers. I would otherwise like to avoid discussions of TCR because too many people have tried to manipulate me into criticizing an organization that I do not know much about. More importantly, a corrupt system will not stop being corrupt by simply changing who is in charge. It disgusts me that some have suggested the problems with TCR would be fixed by replacing foreigners with Americans; there are plenty of examples of Americans exploiting their fellow Americans without needing any foreign assistance. Changing the ownership of a monopoly like TCR without changing the fundamentals of how anti-spam and anti-scam controls are governed would be like replacing the king of the thieves with a new king. Perhaps the new king will institute a swathe of reforms that will benefit the public, but the role does not lend itself to that outcome. Even so, Casem’s aim was more accurate than he could have imagined.
I may have reached the point where I am so loud and annoying that people are reluctant to throw me out of some industry parties for fear that I will become even more loud and annoying in response. That would explain how I know that the Global Informal Regulatory Antifraud Forum (GIRAF), a group of comms regulators from several countries which the FCC never quite seems to join, is about to be lobbied by representatives of the biggest US telcos who will argue there is no need for regulators to enforce KYC rules because self-regulation in the USA is working fine. Yup, you read that correctly. Telcos that provide the bulk of the funding for the CTIA so it can hire expensive ex-FCC lawyers to lobby on their behalf will tell comms regulators outside of the USA that their experience of KYC inside the USA shows there is no need for any enforceable KYC rules to be written.
Meanwhile, Casem’s business was threatened with fines because it supposedly did not follow KYC rules that were never written. And he is sore because there is mounting evidence that the telcos who make him pay for access to their networks through entities like TCR are supplying SIMs to fraudsters because of inadequate KYC controls.
As already hinted above, most people get tired of the trail of details long before they understand what has gone wrong. A convoluted regulatory approach like that taken in the USA makes it especially difficult for people to follow the chain of cause and effect from beginning to end. Transparency is good. Simplicity is even better. The US public would be better off if the US comms industry rid itself of the convolution that Casem referred to in his post. Then more effort might be directed towards finding genuine solutions instead of wasting resources on a rancid mixture of bureaucracy and profiteering.
Those professionals that want to reform the US industry should seek to make allies outside of the USA before their opponents do. The people who captured the FCC are not content to stop with one regulator. Their business models require them to capture more regulators in order to grow their revenues and justify the fat salaries they receive in a stagnant market where most telcos are making large numbers of employees redundant. The parasitic behavior remarked upon by Casem stems from the temptation to exploit monopolies and oligopolies when there is no other way to increase revenues.
On a personal note, I want to share that this article might never have been written were it not for a specific instance of a US mobile operator attempting to control what I publish on this website. They tried to exert pressure on me via a cowardly intermediary in the expectation that I would withdraw a perfectly legitimate concern. The Industry Traceback Group, run by USTelecom, is a niche consumer protection monopoly funded by big US telcos that increasingly traces scam calls to the big US mobile operators, begging the question of whether its overpaid ex-FCC Washington DC lobbyist management would ever direct the FCC to punish those US mobile operators for supplying services to scammers instead of going after foreign businesses. The argument in the article they wanted to censor was expressed more mildly, but the gist remains the same.
Nobody cares when I make assertions that are wrong; people only try to silence me when I am saying something that is accurate. That somebody in a US mobile operator wanted me censored gave me the clue that they were more worried about being punished for their failure to tackle scams than I had previously realized. The final sentences are for those individuals who thought they could use their influence to shut me up.
Thank you for your interest in Commsrisk. Pay as much as you like for ex-FCC lawyers that will lobby on your behalf; regulators read this website too.
